The lottery is not only one of the most popular forms of gambling in America, but also among the most heavily regulated. It is a major source of revenue for state governments, and a powerful political force. But it has also been criticized for being addictive, and for contributing to a wide range of social problems, including crime, family breakdown, and substance abuse. Some states have even stopped running the lottery altogether, while others continue to invest large sums of money in advertising and promotional efforts.
The origin of lotteries is unclear, but they are believed to date at least to ancient times. The ancient Romans were fans, as was Nero; and they are attested to in the Bible, where they are used for everything from determining a king’s successor to divining God’s will. In colonial America, lotteries grew in popularity and helped finance everything from schools and churches to bridges and canals. In the 1740s, Harvard and Yale were both largely financed by lottery proceeds, and the Continental Congress used lotteries to help fund the Revolutionary War.
Lotteries have become particularly attractive to states grappling with fiscal crises in the late twentieth century, when voters reacted against the idea of paying higher taxes. Politicians have promoted lotteries as “budgetary miracles,” enabling them to maintain their services without raising taxes and thus avoiding electoral disaster.
As a result, most state lotteries have followed similar paths: establishing a monopoly for themselves (rather than licensing a private firm in return for a cut of the profits); beginning operations with a small number of relatively simple games; and then progressively expanding their offerings with newer and more complex games. Moreover, in order to maintain a steady stream of new players, state lotteries rely heavily on advertising, which inevitably promotes gambling and can have negative consequences for the poor and problem gamblers.
Although some states rely on advertising, others avoid it in an attempt to limit the social impact of the lottery. In some cases, this has worked; in Massachusetts, for example, the state’s ads have focused on education and community benefits rather than on promoting the game itself. In other states, however, the advertisements have been more blatant and have had a significant effect on lottery sales.
Despite all the publicity that a huge jackpot attracts, most lottery players are not rich; in fact, according to consumer financial company Bankrate, people earning more than fifty thousand dollars per year spend only one percent of their income on tickets. The lower income groups—those making less than thirty thousand dollars per year, or thirteen percent of the population—purchase far more tickets. These are the people who, in economists’ words, are willing to exchange the disutility of a monetary loss for the entertainment value of the chance to win a big prize. And, as a result, their purchases tend to reduce the overall utility of playing the lottery for everyone else.