The Problems of the Lottery Industry

Lotteries are a popular and profitable way for states to raise money. However, there are serious concerns about their long-term sustainability and the underlying psychology that fuels them. The irrational behavior of lottery players has been well-documented. They buy tickets even though they know that their odds of winning are long, and they often have quote-unquote systems, such as buying tickets only at certain stores or at particular times, based on some mystical idea of lucky numbers or combinations. They have a sense that, for better or worse, their next ticket may be their last, best, or only chance at winning.

Lottery games have a long history, with the casting of lots to distribute property and other goods dating back countless millennia. A number of biblical passages mention it, and the practice remained in use throughout ancient Greece and Rome. For example, the Roman emperors gave away slaves and property during the Saturnalian feasts, and a popular dinner entertainment was the apophoreta, in which guests were invited to draw pieces of wood with symbols on them, then select prizes that they would take home.

Today’s state lotteries resemble their ancient predecessors, with the government legislating a monopoly for itself and running a public corporation to manage operations (rather than licensing private firms in return for a portion of the profits). They typically start out with a small number of relatively simple games, then expand with new offerings, such as keno and video poker, in order to maintain or increase revenues. Lottery revenues generally grow dramatically during the first few years of operation, but then plateau or even decline, which can create a sense of boredom among the participants. In addition, there are a range of other problems associated with the industry, including the potential for compulsive gambling and the alleged regressive impact on lower-income groups.

As it grows, a state lottery develops extensive and well-defined specific constituencies, such as convenience store operators, who are the main vendors; lottery suppliers, who frequently make significant contributions to the political campaigns of legislators; teachers, in states where lottery proceeds are earmarked for education; and, of course, the state itself, which rapidly becomes accustomed to its extra revenue. These groups exert a great deal of influence on the decisions of politicians and the legislature as they grapple with balancing the state budget.

A major argument in favor of lotteries is that they benefit a specific, identifiable public good, such as education. This is a powerful message, especially during periods of economic stress when legislators might be tempted to slash public programs or increase taxes. However, studies show that the popularity of lotteries is not correlated with a state’s actual fiscal condition, and that there are many other reasons why states adopt them.