The lottery is a common way of raising money for public and private purposes, by selling tickets for a chance to win a prize, commonly in the form of cash. Some governments outlaw the practice, while others endorse it to the point of establishing state or national lotteries. The size of the prizes offered and the overall prize pool is determined by the amount of money that remains after expenses-including profits for the promoter and the costs of promoting the lottery-and taxes or other revenues are deducted from ticket sales.
In general, people like lotteries because they allow them to fantasize about having a large amount of money at a low cost. But it’s important to keep in mind that lottery players as a group contribute billions of dollars in government receipts that they could have used to save for retirement or college tuition, and that purchasing lottery tickets is often a misguided financial decision for many people, especially those on lower incomes.
Lotteries are able to attract broad public approval because they are often promoted as benefits to the community. But, as Clotfelter and Cook argue, this support is not tied to the objective fiscal circumstances of states—lotteries have won and retained broad public support even when state governments are in good financial health. Rather, state legislators and their constituents benefit from the earmarking of lottery funds to particular programs. This makes the appropriation of lottery proceeds to specific programs look much more politically responsible than would simply allocating them from a state’s general fund, where they might otherwise have to compete with other priorities.
