Public Policy and the Lottery

The lottery is a game where people buy tickets for a drawing at some future date, and prizes are awarded if the winning numbers match those randomly spit out by machines. It is a classic example of public policy being made piecemeal and incrementally, with state lotteries having broad and specific constituencies, including convenience store operators (who are the usual vendors); lottery suppliers; teachers in states where lottery revenues are earmarked for education; and, of course, state legislators and their staffs who quickly get accustomed to the extra revenue.

When state lotteries began to expand in the 1960s after a half-century hiatus, they were sold as easy fundraising tools for funneling millions of dollars into state programs. But critics worry that they are relying too heavily on unpredictable gambling revenues while exploiting the poor. They point out that the poorest third of households buys half of all lottery tickets, and many people play multiple games. They also report that lottery advertising is targeted most aggressively in poorer neighborhoods.

The principal argument used in every state for adopting a lottery has been its value as a source of “painless” revenue, which is, in the simplest terms, a way to finance public spending without imposing especially onerous taxes on the general population. But this arrangement has proven unsustainable. Lottery revenues typically explode soon after their introduction, then flatten and occasionally decline. Moreover, politicians often substitute lottery revenues for other funds that leave the targeted program no better off.

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