A lottery is a game of chance in which participants pay a small amount of money for the opportunity to win a large sum. States often promote these games as a way to raise revenue for public purposes such as education. But how meaningful that revenue really is, and whether the trade-off to people who lose money is worth it, are questions that deserve serious consideration.
Many people who play the lottery have been persuaded by state-sponsored marketing campaigns to believe that the odds of winning are surprisingly high—despite the fact that they’re actually quite low. As a result, they’re often irrational in their gambling behavior: They spend more than they can afford to lose; they buy tickets at the wrong times of day; they choose numbers that remind them of happy memories or significant dates; they buy Quick Picks instead of picking their own numbers; and they follow all sorts of quote-unquote systems that are totally unsupported by statistical reasoning.
The term “lottery” comes from the Latin word for “fateful drawing,” and the idea of giving away prizes by random drawing has a long history. Throughout much of Europe in the Middle Ages, the rulers of cities sponsored lotteries to distribute property, slaves, and other valuables. Privately organized lotteries are also common. They can be used to determine the order of students in a prestigious public school or the location of units in a subsidized housing block. Benjamin Franklin even ran a lottery to fund the purchase of cannons for Philadelphia during the American Revolution.
Since 1964, when New Hampshire initiated the modern era of state lotteries, most states have adopted them. They have largely followed similar patterns: The state creates a state agency or public corporation to run the lottery; legislates a monopoly for itself; starts with a modest number of relatively simple games and a very large prize; gradually expands the scope of the lottery with new games such as keno and video poker; and aggressively promotes its operation through advertising.
State lotteries generate substantial revenues, and in most cases, the majority of the proceeds goes to a prize pool whose size is determined by the total number of tickets sold. The rest of the money is divvied up between administrative and vendor costs, and earmarked for projects that are designated by each state.
It’s not difficult to understand why lotteries attract so much attention and popularity. For one, they have the potential to produce extremely large jackpots, which can be a major source of media attention and excitement. They also can appeal to the public’s desire for wealth and good fortune.
Lotteries have also garnered support from a variety of interest groups: convenience store owners (who make up the bulk of lottery vendors); state legislators (from whom large campaign contributions are regularly reported); suppliers to the industry (who contribute heavily to state political campaigns); teachers and others who receive appropriations from lottery revenues; and, of course, the general public. Moreover, research has shown that the public’s approval of lotteries is independent of the state government’s actual fiscal condition.