Lottery is a popular and sometimes controversial way to raise money for various public purposes. Critics allege that it promotes addictive gambling behavior, is a major regressive tax on lower-income groups, and otherwise has serious public policy problems. State lottery officials, however, face the dilemma of balancing their desire to increase revenues with their duty to protect the welfare of the general public. Despite this inherent conflict, state lotteries have generally succeeded in gaining and maintaining broad popular support.
The word “lottery” is derived from the Dutch noun “lot,” which means fate or fortune. Its history dates back centuries, with some of the earliest examples being public raffles in the Low Countries in the 15th century. These were often used to collect funds for the poor, but they also raised money for town fortifications and other public usages. The oldest still running lottery is the Netherlands’ Staatsloterij, which began operations in 1726.
Initially, most state lotteries operated in essentially traditional forms, with people purchasing tickets for future drawings. In the 1970s, however, innovations were introduced that transformed the industry and created new opportunities for players to win prizes. One of the most popular was scratch-off tickets, which offer a smaller prize and significantly higher odds of winning than traditional lottery games.
These innovations have not entirely eliminated the problems associated with lottery games. Lottery advertisements are often misleading, and critics charge that jackpot prizes are routinely inflated. In addition, the fact that many lottery winners must be paid in equal annual installments over 20 years results in a significant erosion of their current value due to inflation and taxes.
A second problem is that once lotteries have become established, they tend to evolve in ways that undermine their original public policy intentions. As a result, public officials are often left with little control over the way their lottery is run. State legislatures and governors may approve the creation of a lottery, but the details are usually delegated to lottery boards or other state agencies that are responsible for its operation.
Lotteries have developed specific constituencies within each state: convenience store owners (which benefit from the large amount of lottery revenue they collect); lottery suppliers, whose contributions to political campaigns are often heavily lobbied; teachers, for whom much lottery money is earmarked; and state legislators themselves, who grow accustomed to receiving lottery revenue.
As a result, most states are unlikely to abolish their lotteries any time soon. Even in the face of rising unemployment and state budget deficits, public support for state lotteries appears to remain relatively high. This may be partly because of the perception that lottery proceeds are used for a public good, such as education. However, there is also a feeling that the lottery is simply an attractive way to make money in an economy where many jobs have been lost and incomes are declining. As a result, the long-term health of lotteries is likely to depend on the ability of state officials to address these broader issues.