The State Lottery

state lottery

A state lottery is an unusual government enterprise. While it offers some of the worst odds of any common form of gambling, it also promises enormous payoffs to winners (a few million dollars or more for the smallest bet). And, it is the only game in which the government has a virtual monopoly.

Players fund the system by purchasing tickets, which cost between $1 and $10. The profit after expenses is split between the multinational corporations that run the lotteries, retailers that sell them (including the large convenience-store chains, such as Circle K and 7-Eleven), advertising and media companies and state administrators who oversee the process. In all, these entities will take in about $29 billion this fiscal year, according to Howard Center analyses of state financial disclosures.

The rest of the money is earmarked for a variety of purposes by the state, from education to social services. But critics say lottery proceeds are a form of taxation that skirts the need for a broader revenue base, imposing a heavy burden on the poor.

Some states, such as Maryland and California, designate lottery profits for education. Others, including New York, allocate them to general funds and other special projects. Still others earmark them for specific uses, such as addiction recovery programs and stadium construction. But even when a state does earmark lottery profits for particular projects, it is not always able to deliver on its promises. The bottom line is that, after paying out prizes and paying overhead costs, a state may only have enough money left to cover about one-third of its expenditures.