The Public Good and the Lottery
The casting of lots to determine fates and award prizes has a long history in human culture. However, the modern public lottery is a recent phenomenon with relatively broad and deep support. In states that offer lotteries, 60% of adults report playing at least once a year. While many people play for fun, some feel that winning the lottery is their ticket to a better life. The odds are extremely low, but there is always that sliver of hope.
State lotteries attract and sustain enormous popularity by framing their proceeds as benefiting a specific public good, such as education. This argument is particularly effective when state governments face fiscal stress and the prospect of tax increases or cuts in programs. Interestingly, however, research by Clotfelter and Cook suggests that the public’s subjective fiscal condition has little effect on whether or when it approves state lotteries.
Most of the money outside your winnings goes to the participating state, and they have complete control over how to use it. Individual states have gotten creative, often investing lottery funds into everything from support services for problem gamblers to infrastructure enhancements like roadwork and bridgework. Others have earmarked lottery revenues to specific purposes, such as helping needy children. But critics charge that lottery “earmarking” is a myth: the money saved by using lottery funds for a particular purpose simply allows the legislature to reduce the appropriations it would otherwise have to make from the general fund.
In addition to promoting and selling the games, lottery officials run the back-end operations of the system. They design scratch-off tickets, broadcast live lottery drawings and maintain the websites. They also keep track of all the entries and payouts. But the lottery isn’t just a business; it’s also a form of gambling, and gambling comes with social consequences.
Lottery officials are not immune from criticism for promoting a vice that can lead to addiction and even suicide. But they argue that these concerns are insufficient to justify repealing the laws allowing them to operate. While they may be right, their reasoning is flawed: The lottery has a much broader mission than merely distributing cash. It’s about dangling the possibility of instant riches to a populace with limited opportunities for upward mobility.
But there are other ways to boost poorer communities’ incomes, without resorting to a vice that could lead to such a high risk. The government should focus on other strategies, such as raising the minimum wage and increasing access to affordable healthcare.