Lottery Benefits As a Public Service

The drawing of lots for property and other privileges is a practice as old as the human race. It was used by Moses and other biblical figures to distribute land, and it was a common dinner entertainment in ancient Rome (often called “apophoreta”). The lottery is an arrangement in which numbers or symbols are printed on tickets and participants have the opportunity to purchase them for a small price. The winning ticket holder will receive one or more prizes, usually cash, depending on the proportion of numbers they match. Sometimes participants choose their own numbers; at other times the numbers are randomly selected by an official, such as a computer or an independent operator.

Lotteries are a popular source of state revenue, but they have become controversial in recent years because they are seen as a form of public finance that benefits special interests at the expense of the general population. State lotteries are typically set up as a government-run monopoly, and they often attract large amounts of money from convenience stores and other vendors who sell the tickets; suppliers who make heavy donations to state political campaigns; teachers (in states where lottery revenues are earmarked for education); and, not least, lawmakers and candidates who support the lottery and receive generous campaign contributions in return.

But lottery critics contend that the true motive of most state governments is not to improve education or other public services, but to generate a substantial source of tax revenue. They point out that lotteries have been successful at gaining broad public approval precisely when the states are facing financial crises. This is because, as the economist Clotfelter and his colleagues have shown, the popularity of a lottery has little relation to a state’s actual fiscal condition.

As a source of public funds, lottery proceeds have several advantages over other forms of state financing. They are relatively painless for the taxpayer because they involve voluntary spending by players and do not raise taxes directly. They are also efficient in that they can raise large sums quickly and spread them out over a wide range of beneficiaries. This is an important benefit in a time of fiscal stress, when voters demand that their government spend more, and politicians look for ways to raise money without raising taxes.

Moreover, lottery profits have a low incidence of fraud and other problems compared with other forms of state revenue. Nonetheless, critics argue that lotteries should not be considered a public service; they promote gambling and lure people who might otherwise avoid it with promises of instant riches. The truth is that the odds of winning a prize are very slim, and the jackpots are often paid out in small annual installments over many years, with inflation and taxes dramatically eroding their value. In addition, studies have found that lottery players are disproportionately drawn from lower income groups. Thus, it is not surprising that many are suspicious of the industry’s claims of social responsibility.