The state lottery generates significant revenues for American states, enabling them to fund important public services and programs such as education, infrastructure, and public safety. In many states, a portion of the proceeds are earmarked for specific purposes such as college scholarships or environmental conservation. But critics point out that these “earmarked” funds remain a part of the general budget, to be used for any purpose the legislature chooses. The state has no incentive to limit the amount of lottery appropriations, which are often a tempting source of funding in times of fiscal stress.
Lotteries enjoy broad popular support and have been a major source of income for state governments in an anti-tax era. But they are controversial in other ways: critics charge that they promote addictive gambling behavior and impose a large regressive tax on lower-income groups. They also draw criticism for their failure to reduce crime or other social problems. In addition, lotteries are criticized for promoting an image of state government as a patronizing and incompetent bureaucracy.
Some states, like New Jersey, have established hotlines for problem gamblers. Others have enacted legislation to prevent the sale of tickets to minors. And a few have garnished winnings to collect debts, including unpaid child support and taxes.