Lottery is a popular way for state governments to raise money, and the proceeds are often earmarked for education or other public goods. But while lottery revenues might be a welcome relief for states struggling with economic challenges, research suggests that state lotteries don’t actually have much impact on the objective fiscal health of the state government.
In fact, research has shown that state lottery proceeds are primarily used to increase state government spending on items that do not improve the state’s financial position. Lotteries tend to be adopted by states with large social safety nets, suggesting that the underlying belief is that lotteries can help supplement these programs without burdening low-income households.
Lotteries are a form of gambling, and critics argue that they are essentially a disguised tax on those with the least incomes. Studies have shown that lower-income Americans are disproportionately represented among lottery players, and many play multiple times per week. People with the lowest incomes tend to have fewer dollars to spare and are more likely to spend money on lottery tickets than those in the middle or upper-income groups. Some states have taken this to heart, and use their lottery funds to provide services for low-income residents, such as subsidized housing or kindergarten placements.