The Public Benefits of Lottery Revenue

The lottery is a popular form of gambling in which participants purchase a ticket and hope to win a prize by matching numbers drawn at random. Lottery winners typically receive cash or goods. The lottery is an important source of revenue for state governments. In 2021, Americans spent more than $100 billion on tickets, making it the country’s most popular form of gambling. States promote lotteries as a way to raise money for important projects without raising taxes. Critics charge that the money generated by the lottery actually undermines public services and benefits the rich at the expense of the poor, minorities, and problem gamblers.

Lotteries have a long history, with many of the first American colonies holding them. Benjamin Franklin sponsored a lottery to fund the construction of cannons for Philadelphia during the American Revolution, and George Washington used one in 1768 to pay for the repair of his home. Today, state governments run lotteries by establishing a legal monopoly and naming a public agency or company to administer them. They begin with a modest number of relatively simple games and, in response to pressure for additional revenues, progressively expand their product lines and complexity.

Several states developed lotteries during the late 1960s, when economic stress led people to believe that state government needed more money. Lottery popularity often peaks when the proceeds are earmarked for a specific public good, such as education. But research suggests that the objective fiscal health of state governments does not have much bearing on whether or when states adopt lotteries. And a state’s reliance on lottery revenues can create conflicts of interest between the state’s desire to boost revenue and its commitment to public welfare.