Are State Lotteries Serving the Public Interest?

Lotteries are a familiar part of American life, with most people aware that they exist, and most having played at some point in their lives. They are also a major source of state revenue, and are an important tool for raising money for public projects and social welfare services. But the popularity of lotteries also raises a series of troubling questions about the nature of gambling, and whether state officials are serving the general public interest in running them.

The earliest lottery-like activities were government-sponsored and private lotteries designed to help finance the building of public buildings, bridges, and other infrastructure projects. These were popular with the British colonists, and helped fund projects such as building the British Museum and the restoration of Faneuil Hall in Boston. The Continental Congress even tried to hold a lottery to raise money for the revolutionary war, but it was unsuccessful. Private lotteries continued in America, as a way for the wealthy to raise money for themselves and for charity. They also provided a mechanism for the wealthy to buy property, slaves, and other items of value.

Today, state lotteries are very popular, with about 60% of adults reporting having played at least once in their lifetime. Lottery revenues have become a staple of state budgets and, in some cases, have grown to be the dominant source of revenue for many public agencies, particularly those devoted to education. These growth patterns have prompted new issues and concerns about state lotteries, however, ranging from the problems of compulsive gambling and the regressive effects on low-income communities to the question of whether lotteries promote gambling addiction or social inequality.

Regardless of the specific state lottery, most follow similar models: they legislate a monopoly for themselves; establish a state agency to run the lotteries (as opposed to licensing a private firm in exchange for a share of the profits); begin operations with a modest number of relatively simple games; and then respond to growing pressures for additional revenue by expanding their game offerings and complexity. This expansion is often driven by the desire to lure new players and increase ticket sales, but it can lead to significant financial risks for states.

In addition to the prize pool for the winning tickets, state lotteries allocate a portion of their revenue for administrative and vendor costs, as well as toward whatever projects each state designates. While the distribution of these funds may vary, in most states, a significant amount goes toward public education.

But, because lotteries are run as businesses aimed at maximizing profits, they must advertise and market their products in order to reach the maximum number of potential participants. In turn, this promotes gambling in general and, potentially, encourages problem gamblers to play the lotteries. Those who argue that the existence of state lotteries is a good thing point to the fact that they generate large amounts of revenue for states and contribute to education, public safety, and other social services. But, those who have a different view point out that lotteries are simply the latest and most extreme form of state-sponsored gambling.