What is a Lottery?

A lottery is a form of gambling in which numbers are drawn at random for a prize. Some governments outlaw it, while others endorse it to the extent of organizing a state or national lottery. Those that sponsor lotteries establish a state agency or public corporation to run them; start with a modest number of relatively simple games; and then, in order to increase revenues, expand the game portfolio. The resulting public/private enterprise often functions in much the same way that privately organized lotteries do, although state sponsorship typically limits a lottery’s liability.

The casting of lots for making decisions and determining fates has a long history (with several instances recorded in the Bible), but lotteries in which prizes are awarded for material gains have far more recent origins, dating from the 15th century, when they became popular in Europe. The oldest running lottery is the Dutch Staatsloterij, founded in 1726. In the United States, private lotteries existed at least as early as the American Revolution. Famous American leaders like Thomas Jefferson and Benjamin Franklin held lotteries to retire their debts, and the Continental Congress in 1776 voted to hold a lottery to raise funds for the war effort.

In the eighteenth and nineteenth centuries, lotteries were widely used as mechanisms for obtaining “voluntary” taxes, helping fund everything from roads to jails and hospitals. They were also instrumental in building the first American colleges—Harvard, Dartmouth, Yale, and King’s College—as well as numerous towns and cities. In the early 1800s, even Congress was urging state legislatures to adopt lotteries.

State lotteries have been marketed as ways to promote the idea that gambling is fun and harmless, which may be true for some players. But it is also true that they are regressive in their impact—people on low incomes play them disproportionately and tend to spend a greater share of their incomes on tickets. In addition, lottery retailers collect substantial commissions from the sale of tickets and, in some cases, cash the winnings for their customers.

Lotteries are run as businesses with the primary goal of maximizing revenue, so they depend on advertising to persuade people to spend money on tickets. But this approach runs at cross-purposes with the social functions that the state should perform. Is it appropriate for state government to be promoting gambling, especially in a manner that tends to regressively affect poor and problem gamblers?