Lottery Public Policy


In the United States, and elsewhere in the world, lotteries are games whereby people pay a small sum of money for a chance to win a prize. The prizes can be cash, goods, or services. In addition to promoting gambling, some lotteries are also used to raise funds for charitable or public purposes. The earliest recorded lotteries were in the Low Countries during the 15th century, where town records from Ghent, Bruges, and other cities indicate that public lotteries were held to fund town fortifications and help the poor. Many state governments have since established lotteries to promote gambling and raise revenue for public purposes. Lottery advocates argue that lotteries provide a popular alternative to raising taxes and cutting public spending, especially during times of economic stress. Critics contend that the lottery is a form of gambling at cross-purposes with the public interest and can have serious negative consequences, particularly for the poor and problem gamblers.

In some cases, lottery proceeds are used to improve the environment and community services such as parks, playgrounds, libraries, and museums. In other cases, the money is used to fund a variety of public projects and initiatives such as police and fire departments, schools, roads, and bridges. Many states also use lottery revenues to reduce property taxes.

The history of state lotteries is a classic example of public policy made piecemeal, incrementally, and with little overall overview. Lotteries typically begin by raising a relatively modest amount of money and then, as pressure for additional funding grows, progressively expand their operations, adding new games and increasing ticket prices to meet revenue goals. Moreover, because lotteries are run as businesses, they must focus on maximizing profits, and this necessarily places them at odds with the interests of the general public.

Lottery advertising is frequently accused of misleading players, including presenting false odds and inflating the value of winnings (lottery jackpot prizes are paid in equal annual installments over 20 years, with inflation dramatically eroding the current value). The lottery industry is also often criticized for failing to regulate its own activities or protect its participants from fraud and other misconduct. In the long run, many critics believe that a government should not profit from gambling or at least be careful to limit its involvement to a small number of carefully controlled programs.

In the end, what matters is not whether the lottery is a good idea or not but how it is managed. As is common with many forms of public policy, lottery decisions are driven by a need to generate revenue and by the desire of political leaders not to raise taxes. This makes it difficult, if not impossible, to develop a coherent and cohesive gambling policy that would ensure that the lottery is being managed for its intended purpose. Instead, what we usually see is a fragmented approach with lottery officials and legislators operating at cross-purposes. The result is that most state lotteries operate without a clear and comprehensive gambling policy.