The Pros and Cons of State Lottery Programs

Lotteries are an important source of public funding and have a wide appeal among the general population. Whether the purpose is to raise money for public goods, such as defense or welfare, or to finance private activities such as a family vacation, lottery proceeds are often viewed by state officials as a relatively uncontroversial source of revenue.

The history of lottery-like events goes back as far as ancient times. In fact, casting lots to determine fates and privileges has a long history in human culture and is even recorded in the Bible. More recent, however, is the use of lotteries to provide material prizes. The first European public lottery was organized in the 16th century for a variety of purposes, including building defenses and providing aid to the poor.

The first modern state lottery was established in New Hampshire in 1964. Since then, nearly all states have adopted one. The process by which a lottery is established is similar across the country: the state legislates a monopoly for itself or establishes a public corporation to run it; begins operations with a modest number of relatively simple games; and, because of constant pressure for additional revenues, gradually expands in size and complexity, particularly by adding new games.

While the benefits of lotteries to society are generally seen as positive, they come with a number of negative side effects. Many of these stem from the inherent nature of lotteries as a form of gambling. While some people who play the lottery do not become problem gamblers, a significant percentage of those who do are. Furthermore, the promotion of gambling through state-sponsored lotteries is at cross-purposes with public policy objectives.

Moreover, because the value of prizes awarded by a lottery are based on total prize pool receipts, the total prize money is not guaranteed and may be subject to fluctuations. For example, the prize money for a winning ticket may be reduced or even eliminated by promotional expenses, taxes or other revenue deductions. The average prize amount per winner, if not the actual cash prize itself, is frequently subject to variation due to the timing of sales and the overall number of tickets sold.

In addition, the high fees paid to private advertising firms that promote lotteries are an additional expense for a state. Considering all of these issues, critics of state-sponsored lotteries have developed a set of arguments that argue that government at any level should not profit from gambling and should not promote it.