Public Policy and the Lottery


Historically, state lotteries have been a classic case of piecemeal and incremental public policy making. Typically, a lottery is established by legislative act; a public corporation or agency is created to run it; and it starts out with a small number of relatively simple games. Its evolution, however, is often driven by constant pressure to increase revenues and to introduce new games. Thus, the original policy decisions are usually overtaken by events and the lottery reaches its mature form with little input from anyone other than its own internal officials.

Almost all states have now adopted a lottery. The reasons for this widespread approval are complex and varied, but they almost always cite the lottery as a source of “painless” revenue (in other words, a tax on players rather than on taxpayers). This appeal is particularly attractive in times of economic stress, when voters fear the need for increased taxes or cuts in state services.

Lottery profits are highly variable and depend on a range of factors, including advertising, ticket prices, prize amounts, and the availability of alternative sources of gambling revenue. While a lottery’s initial profits typically rise sharply, they can then plateau or even decline. Lottery operators typically respond to this pattern by expanding the number of available games and increasing their advertising budgets.

In addition, many states use a variety of special strategies to promote their lottery. For example, they may award huge prizes to jackpot winners. These “super-sized” jackpots generate significant publicity and stimulate interest in the game. Moreover, the public tends to believe that these high-profile cases are indicative of the general probability of winning the lottery.

A final factor that influences the popularity of a lottery is its perceived association with a specific public benefit, such as education. While this argument is powerful, it has failed to convince those who are against the idea of a state-run lottery. For these critics, the ad campaign is simply a smokescreen to conceal the fact that the lottery is in essence a tax on low-income families.

In fact, although the percentage of people playing the lottery varies by socio-economic background, it is a safe bet that most of the money spent on tickets comes from middle-income neighborhoods. And, as Clotfelter and Cook note, the poor play lottery games at a significantly lower rate than do middle- and upper-income groups. Ultimately, this disparity is an indication of the fact that the lottery is not an equitable source of income. For many of those who have tried to win the lottery, their efforts have been in vain. However, for those who have followed the rules of probability, it is possible to have a very good chance of becoming a winner. Just be sure to buy a ticket with the right numbers and don’t give up hope. You could be next. Good luck!