Lottery As a Public Good

Lottery is a form of gambling in which numbers are drawn at random for a prize. The modern era of state lotteries began in New Hampshire in 1964, but they have since spread to most states. Although there is wide debate about whether or not a lottery is a legitimate form of government spending, the actual operation of a lottery is relatively simple: the state legislates a monopoly; establishes a public agency to run the lottery (as opposed to licensing a private firm in return for a cut of revenues); begins operations with a modest number of games; and, under constant pressure to increase revenues, progressively expands the scope and complexity of its offerings.

People plain old like to gamble, and the big lure for many is a chance at instant riches. This is a human impulse that, to some extent, is inextricably linked with the concept of fairness and the desire for social mobility. But there is a lot more going on in the world of the lottery than simply this. It is, essentially, an enormous marketing campaign that promotes the idea of instant wealth in an age of inequality and limited opportunities for social mobility.

In order to attract and retain players, lotteries advertise their proceeds as benefiting a specific state public good, such as education. This message has proven especially effective in times of economic stress, when the prospect of tax increases or cuts in state spending looms large. Nevertheless, it has been found that the objective fiscal health of a state does not appear to have much impact on the timing or intensity of the lottery’s popularity.

Lotteries generate large amounts of revenue for their operators, the state governments that run them, and the vendors who sell tickets. The profits, in turn, support a wide range of state government activities. But there are two key questions: (1) is the promotion of gambling, including state lotteries, an appropriate function for government at any level; and (2) even if it is, does this activity promote problems – such as compulsive gambling or its regressive effects on lower-income groups – that should not be promoted?

There is a clear conflict between the goals of lottery producers and those of state governments. The former promotes gambling as a fun and enjoyable pastime, while the latter is primarily concerned with the fiscal health of its residents and the integrity of its public finances. In the case of state lotteries, this results in an excessive reliance on low-income residents to finance an otherwise largely unsubsidized form of gambling. This is a dangerous combination, which has contributed to numerous state budget crises and has raised concerns about the regressivity of lottery policies. The solution to this conflict requires a thorough review of both the purpose and the operations of state lotteries. This article suggests a framework for this review. It begins with the recognition that, in addition to promoting the idea of gambling as a fun and desirable activity, lottery advertising also has an important role to play in fostering societal norms against compulsive gambling.