Lottery is an activity whereby numbers or symbols are drawn at random to determine a prize. The casting of lots for the distribution of property or other things has a long history in human culture, and several instances of lottery-like activities appear in the Bible. Modern state lotteries, however, are less than a century old, with the first recorded drawing of numbers to win a prize held in 1466 in Bruges, now Belgium, for the stated purpose of providing financial assistance to the poor.
The modern lottery is a complex affair. The primary beneficiaries are the state and local governments, who use the proceeds to fund a variety of public projects and services. A significant proportion of the total revenue is devoted to prizes, but most of the rest gets divvied up between various administrative and vendor costs, plus toward whatever projects the states designate. State legislatures make these decisions, but a major determinant is the state’s political environment and public opinion on gambling.
Some states, particularly those with smaller social safety nets, saw the lottery as a way to finance new services without increasing taxes on the middle class and working classes. Lottery revenues have also become increasingly important for state governments in an anti-tax era. But there is an ugly underbelly to this: Lottery play is regressive, with lower-income groups spending the largest portion of their disposable income on tickets.
Lottery advertising tends to downplay this fact and present it as a game, euphemistically described as “a chance to win big money.” The truth is that the vast majority of people who play the lottery do not win, and those who do generally spend a large fraction of their income on tickets. In addition, there are some clear patterns in the underlying data on lottery play by socio-economic group: men play more than women; blacks and Hispanics play more than whites; the very old and the very young play less than those who are middle-aged; and lottery play drops sharply with formal education levels.
Aside from the regressive nature of lottery play, there are other issues. For example, the lottery is a form of monopoly that creates a number of special interest constituencies: convenience stores (the main vendors for state lotteries); lottery suppliers (heavy contributions to state political campaigns are frequently reported); and teachers in those states where lottery funds are earmarked for educational purposes. In addition, the very wealthy can afford to play more than most others, and their playing skews the results of the drawings.
The bottom line is that lottery play, like all forms of gambling, should be treated as a serious matter. It can have significant negative effects on individuals and society, and the government should manage it with care. But it must be aware of its own regressive and monopolistic aspects, and try to avoid creating dependencies on painless revenue sources that it cannot fully control. Otherwise, it is in danger of losing the ability to fulfill its essential public functions.