Why the Lottery Is a Necessary Public Finance Tool


Lotteries are popular in many states, and they’ve become a major source of government revenues. They are criticized as a bad way to spend money, but they are a convenient way for politicians to get their hands on the public’s cash without paying taxes. Those who oppose the lottery argue that they are corrupt and don’t serve the needs of the people. But those who support it say that they are a necessary part of the American system and provide an important alternative to raising taxes.

The practice of distributing property and other goods by casting lots has a long record in human history, going back to biblical times. Ancient emperors gave away property and slaves by lot, and dinner entertainments in classical Rome frequently featured an apophoreta where guests picked pieces of wood with symbols on them for prizes they could take home. The modern lottery has a much shorter history, but it is widely accepted in the United States that it is an essential and legitimate form of public finance.

Before the 1970s, state lotteries were basically traditional raffles: the public bought tickets for a drawing held at some future date. Innovations in the ’70s transformed lotteries into instant games such as scratch-off tickets that offer lower prize amounts and higher odds of winning, typically on the order of 1 in 4 or 1 in 10. Lottery revenues expand dramatically at first but soon begin to level off and sometimes decline. To maintain their popularity, governments and licensed promoters introduce new games every few years.

A big reason for lottery’s success is that it appeals to a wide range of people. Its main constituencies include convenience store operators (whose profits are usually the highest), lottery suppliers (who often contribute heavily to state political campaigns), teachers (in those states where some of the proceeds are earmarked for education), and, of course, the general population. But the biggest audience for a lottery is the poor, who spend $80 billion a year on it.

While a lottery may be a great way for the poor to build an emergency fund, it’s not a good idea for them to gamble on winning the jackpot. If they do win, they face enormous tax bills that will drain their savings and leave them penniless in just a few years. Instead, the rich should invest in safe investments or pay off their credit card debt.

Moreover, the lottery is filled with traditions that a villagers feel bound to uphold. They are loyal to the shabby black box that holds their tickets, even though it is falling apart and hardly even black, because it represents a tradition that they don’t want to change. The same is true for other traditions, such as a superstition that says the lottery is rigged by a special group of people. But these traditions don’t have to exist, and there is no logical reason why the villagers should remain loyal to their illogical black box.