Public Policy and the Lottery

A lottery is a gaming scheme in which prizes are awarded by chance. It involves the drawing of numbers for a prize or series of prizes and is often operated by a state government. While the casting of lots for personal or material gain has a long history, lotteries themselves are relatively recent in human affairs. Since 1964, when New Hampshire introduced the modern era of state lotteries, no state has abolished one. State governments have used lotteries to raise money for a wide variety of projects, from road repairs and new schools to public works and social services. Lotteries have become so popular that they are the source of almost one-quarter of all state revenue. Unlike sales and income taxes, which are a burden on all citizens, lottery revenues are collected from those who choose to play, making them an attractive option for state legislators and other officials who need to increase spending without raising taxes.

In the early days of the United States, lotteries were a major tool for raising quick capital for important public projects. Lotteries helped build roads, jails, hospitals, and schools and even provided funding to help establish the nation’s banking and taxation systems. Famous American leaders such as Thomas Jefferson held a private lottery to pay off his debts, and Benjamin Franklin sponsored a public lottery to raise money for cannons to defend Philadelphia from the British.

After a period of dramatic expansion, most lottery games reach a point where their growth begins to level off and eventually decline. To maintain revenues, game producers are constantly introduced new games and innovations to attract players and keep them interested.

The growing popularity of lotteries has led to numerous social, economic, and ethical problems that have made some governments cautious about expanding the programs. These include concerns about the possible compulsive behavior of some lottery players, regressive effects on lower-income people, and the need for better controls on advertising. Many of these issues are a result of the way in which lottery operations evolve over time. Decisions about a lottery are often made piecemeal and incrementally, with little or no general oversight. As a result, it is difficult for anyone to develop an overall picture of how a lottery operates or to make a judgment about its impact on the public.

The lottery is a classic example of how public policy is developed in a fragmented manner. While the initial decisions in establishing a lottery are usually made by a single official, a host of issues quickly arise. These issues are driven by the industry’s continuing evolution and the fact that state officials find themselves inheriting policies and a dependency on revenues that they can influence only intermittently or not at all. It is therefore important for all lottery operators to continually assess the effect that their policies and practices are having on the public. Ultimately, this is the only way to ensure that a lottery continues to be viewed as a desirable form of public finance.