Public Policy and the Lottery

A lottery is a game in which players pay a small amount of money (often one dollar or less) for the chance to select numbers that are then drawn randomly by machines. If enough of their selected numbers match those drawn by the machines, they win a prize, typically cash or goods. Some governments outsource the operation of their lotteries to private corporations, but in most cases a government agency or public corporation runs them.

State officials generally promote the adoption of a lottery by emphasizing its value as a source of “painless” revenue that does not require a tax increase and thus avoids political controversy. This argument is especially effective during times of economic stress, but it has also been successful when states are in strong fiscal condition.

In most cases, the lottery proceeds are used for a specific public purpose, such as education. However, it is important to note that the actual fiscal circumstances of a state do not appear to influence its decision to adopt or maintain a lottery.

Clotfelter and Cook report that state legislatures tend to legislate a monopoly for themselves, establish a state agency or public corporation to run the lottery, and begin operations with a modest number of relatively simple games. In response to pressure for additional revenues, they progressively expand the lottery in size and complexity.

As a result, the lottery appears to be a powerful force in shaping public policy. But it is also worth remembering that the prizes awarded by the lottery are largely based on luck, and that many low-income people and minorities participate disproportionately less than their percentage of the population.