Across the country, state legislatures and voters have approved lotteries as painless forms of taxation. Unlike sales taxes and other direct forms of taxation, lottery money is a form of voluntary gambling that requires no government enforcement or regulatory agency to collect and distribute it. Lotteries have been around for centuries, with a storied history that includes the casting of lots to settle disputes and give away property, slaves, and even Jesus’ garments after the Crucifixion. In the modern era, lotteries have become ubiquitous. The first lotteries were held in the Low Countries in the fifteenth century, to raise funds for everything from town fortifications to poor relief.
As a means of raising money, the lottery is relatively simple to organize and easy for people to participate in. As a result, it is very popular and widely accepted. Nevertheless, the popularity of lotteries is not without its critics. Some of the criticisms are specific, focusing on compulsive gamblers and the regressive impact that lotteries have on low-income people, while others are more general.
When New Hampshire launched its lottery in 1964, it was amidst a nationwide tax revolt. As states scoured their budgets for solutions that wouldn’t inflame their anti-tax constituencies, they turned to lotteries. Since then, more than fifty states have adopted them.
Lottery revenue is collected and distributed in a variety of ways, but the basic formula remains the same: each ticket cost a fixed amount to purchase, and the prize pool grows with ticket sales until it reaches a predetermined sum (in addition to profits for the promoter and the costs of promotion). The odds of winning the jackpot are set before tickets go on sale. The higher the jackpot, the lower the chances of a person winning it.
Although the lottery is a popular way to spend one’s money, its success hasn’t necessarily made governments better off. Many state officials have inherited lotteries that have grown in size and scope, without any clear framework or legislative mandate for how to govern them. Moreover, the authority that oversees lotteries is fragmented between different branches of government and further subdivided into various administrative units, with the result that few states have any coherent policy on the subject.
Lottery commissioners, for their part, have tried to dispel these concerns by shifting the public’s perception of the industry. They have promoted the notion that the lottery is just a game, and they’ve made the prizes seem ever more astronomical to emphasize the thrill of a possible victory. In the end, though, these strategies largely fail to address the root of the problem. The fact is that, in a world of inequality and limited social mobility, some people simply like to gamble. And the state’s insistence on downplaying that fact obscures the regressive effects of lotteries and misleads people about what they are doing when they buy a ticket.