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Raising Public Funds Through the Lottery

A lottery is a low-odds game of chance or process in which winners are selected by a random drawing. It can be used in decision-making situations, such as sports team drafts or allocation of scarce medical treatment, but it is also a popular form of gambling that encourages people to pay a small amount of money for the chance to win big. State and local governments often administer lotteries.

The casting of lots for decisions and fates has a long record, but the lottery as a mechanism to raise public funds is relatively modern. Its popularity rose with the economic challenges of the immediate post-World War II period, when states found it increasingly difficult to expand their social safety nets without imposing particularly onerous taxes on working class families.

Most lotteries today operate on the same basic model: a state legislates a monopoly for itself; establishes a public agency or corporation to run it (rather than licensing a private firm in exchange for a cut of the profits); begins with a modest number of relatively simple games; and, due to pressure to increase revenues, progressively increases the size and complexity of the games offered.

The prevailing message is that lottery players are doing a good thing for the state by buying tickets. But that message is based on the false assumption that the revenue generated by the lotteries is somehow equivalent to general taxation, and that the proceeds of the lottery would be a painless way to raise money for state spending. Studies have shown, however, that the popularity of lotteries does not correlate with a state government’s actual fiscal condition.