Public Benefits and the Lottery

A lottery is a system for the distribution of prizes based on chance. The drawing of lots to determine ownership or other rights has a long record in human history, including several instances in the Bible, although lotteries as vehicles for material gain are of more recent origin. They are a means of raising funds for various public purposes, including wars, township improvement, college scholarships, and public works projects.

The basic elements of a lottery are a mechanism for collecting and pooling all the money placed as stakes, a system of rules for selecting winners, and a means of publicizing the results. The rules must specify the frequency and size of the prizes, and costs associated with organizing and promoting the lottery must be deducted from the prize pool. The number of large prizes, in particular, affects ticket sales and public interest. The rules must also balance the desire to attract players with the need for the prize money to cover costs and generate profits.

State governments began to adopt lotteries in the post-World War II era as a way to raise revenue without onerous taxes on the middle and working classes. These states were largely Northeastern and heavily Catholic, whose populations were more tolerant of gambling activities than those in other parts of the country. They all followed similar patterns: they legislated a monopoly for themselves; formed an agency or public corporation to run the lottery; started with a modest number of relatively simple games; and, because of pressure to generate additional revenues, progressively expanded the lottery in both the number of games and complexity of those games.

While people are generally willing to gamble for a trifling sum on a chance of considerable gain, they will only do so if they believe that the utility (in terms of non-monetary as well as monetary gains) exceeds the disutility of losing the money. Lotteries are marketed on the basis of this belief, with advertisements arguing that the entertainment value of winning the big prize far outweighs the cost of purchasing a ticket.

But, while a lottery has the potential to provide substantial non-monetary benefits, it cannot be justified on this basis if the proceeds are used to support public expenditures. Whether or not the benefits outweigh the costs, it is certainly questionable that a government should be in the business of encouraging citizens to spend money on a random shot at achieving some grandiose goal. In addition, as a matter of practicality, it is inefficient for the state to spend resources on a lottery that is largely driven by the whims of people who are willing to buy tickets despite the odds against them.