Problems and Benefits of the State Lottery

state lottery

The state lottery is a government-run game of chance. It usually offers a cash prize in exchange for a dollar ticket; after paying out the prizes, operating expenses and advertising costs are deducted, leaving a profit to the sponsoring state. The profit is distributed to a variety of public services, including schools and other educational systems, as well as programs to support veterans; breast cancer awareness and research; and HIV/AIDS prevention, education and treatment.

In an era in which states are increasingly hostile to tax increases, lotteries have gained and retained broad popular approval. The argument is that they are a painless way for state governments to boost revenue. This view is largely unfounded, however. In reality, a state’s actual financial situation has little to do with the decision whether or not to introduce a lottery.

As with any government activity, there are problems associated with the state lottery. The main one concerns the ability of any level of government to manage an activity that it profits from. Lottery advertising campaigns are frequently slick and misleading; they often overstate the effect of lottery revenues on state budgets. In fact, in California, where a high-profile campaign proclaimed that lottery proceeds would benefit schoolchildren, the resulting income covered, in the first year of operation, about five per cent of K-12 funding.

State lotteries also tend to develop specific constituencies: convenience store owners (whose businesses are the main vendors); suppliers to the games (heavy contributions from these companies to state political campaigns are routinely reported); teachers (in those states in which lottery revenues are earmarked for education); and legislators (who quickly become accustomed to the extra revenue). Many laws also allow lottery prize money to be garnished to pay debts, ranging from child support payments to defaulted student loans.