Across America, lottery players are shelling out millions to try their hand at winning a big prize. Depending on the state, 50%-60% of ticket revenue goes to the prize pool, with the rest going toward administrative and vendor costs and whatever projects each state designates. So the question is, should state governments be in the business of promoting gambling? And if so, is it a good idea?
Making decisions or determining fates by the casting of lots has a long record in human history, but lotteries offering money prizes are much newer. The first recorded public lottery was organized by Roman Emperor Augustus for municipal repairs in Rome, and the first to distribute prizes in the form of money dates from 1466 in Bruges.
Since then, lottery games have been embraced by governments all over the world. Today, dozens of states offer lottery games. Some also organize smaller public lotteries in which a limited number of people can purchase tickets for the chance to win a specific prize.
In addition to promoting gambling, state lotteries raise and allocate funds for a variety of state programs, including education, infrastructure, and social services. They have also been a favorite source of “painless” revenues, which can be raised by the state without imposing additional taxes on its citizens.
Despite the state-sponsored nature of lotteries, they have not been immune to the anti-tax sentiment in our country. Many states have seen their reliance on these revenue sources grow during times of fiscal stress, with the resulting pressures to increase prize amounts or reduce operating costs. Nevertheless, research shows that state governments’ objective fiscal circumstances do not appear to influence the public’s approval of lotteries.
