The lottery is a huge industry that provides billions of dollars in prize money to winners each year. But it didn’t always have such a smooth ride in the United States. In fact, it’s been a rocky and often controversial affair, both as state-run gambling enterprises and as private games. Today, lotteries are a staple of state governments and have developed broad popular support. But they’ve also become a major source of friction and controversy, as the results of the games have been highly politicized. The history of the lottery is a reminder that gambling can be very dangerous.
Despite Puritans’ views of gambling as “a dishonor to God and a door and window to worse vices,” lotteries were a regular feature of New England life in the 1600s. In 1612, for example, King James I authorized the Virginia Company to run a lottery to help finance ships to the colony of Virginia. By the 1720s, public and private lotteries were common throughout New England. In fact, in 1832 the Boston Mercantile Journal reported that more than 420 lottery games were held in eight states that year.
In addition to the obvious revenue-generating benefits, lotteries have a number of other advantages for state governments. They tend to generate significant amounts of money from a relatively small base, they are easily administered by a government agency, and they are easy to promote. They are also attractive to voters because they are a voluntary form of taxation and do not force a state to increase its overall taxes.
Lottery revenues have been used to help finance a wide range of projects, from paving roads and building schools to paying for the military and distributing property. The practice of dividing property or other prizes by lottery has a long record in human history, including several instances in the Bible. During the era of Roman Emperors, lotteries were used to give away slaves and property as part of Saturnalian feasts and other entertainments.
As state lotteries have grown in popularity, they have also developed extensive constituencies: convenience store operators (who are the primary vendors for state lotteries); lottery suppliers (whose heavy contributions to state political campaigns are routinely reported); teachers (who have come to depend on lottery proceeds to supplement their regular incomes); and state legislators (who find it easy to justify earmarking lottery proceeds to particular projects). But one problem with this approach is that it may not be sustainable. Lottery play tends to drop when the state’s fiscal health deteriorates.
Lottery revenues also tend to decline if the public’s opinion of state government begins to deteriorate. This is particularly true when the lottery appears to be benefiting a specific social good, such as education. But studies have shown that this effect is limited by the degree to which the lottery is perceived as a genuine benefit and not simply as an alternative form of taxation. The ability of government at any level to manage an activity that it profits from, in an anti-tax era, is a serious issue.