The State Lottery and the Public Good

The state lottery provides a valuable source of state revenue, especially for education programs. It is also popular with the public, a fact that has facilitated its rapid growth. The lottery’s high profitability in an anti-tax era makes it attractive to legislators unwilling to raise taxes; and the chance of winning big draws players. Yet critics argue that lotteries promote high-risk gambling, con the hapless, and create compulsive behavior. They point to a spate of crimes linked to compulsive playing, including embezzlement and bank holdups. Such complaints are unlikely to derail the expansion of state lotteries, which are an increasingly common source of government revenue.

The majority of states have lotteries, and they are generally regulated by statutes that establish a lottery commission or board and specify details, such as the time after which drawings must be held to determine winners, the documentation that a winner must present, and the method for paying prizes. In most cases, the statutes set the percentage of proceeds that can be spent on operating expenses and on prizes.

Once a lottery is established, its revenues typically grow rapidly at first, then begin to level off or decline. This explains why lottery officials continually introduce new games to maintain or increase revenue levels. It is also likely why the public appears to remain supportive of lotteries, despite their growing boredom and the proliferation of illegal gambling. Lottery proponents argue that the proceeds support a specific public good, such as education, and this argument is effective in gaining and maintaining public approval.