The lottery is a popular way for state governments to raise funds for everything from road improvements to schools. The popularity of lottery games is based on two factors: people like to believe that the money they spend on tickets will benefit a good cause, and states have found it hard to increase taxes or cut services even when their finances are strained.
Lotteries have a long history, going back at least to the Low Countries in the 15th century. Town records from Ghent, Utrecht, and Bruges refer to the use of lotteries for raising funds to improve town fortifications or help the poor.
By the 17th century, public lotteries were common in England and America to fund everything from paving streets to building churches. In the early American colonies, the Continental Congress held a lottery to raise funds to support the Revolutionary War effort. It failed, but private lotteries continued to raise funds for such public projects as Harvard, Dartmouth, Yale, and King’s College (now Columbia).
In the modern era, most state lotteries operate much like traditional raffles, with players purchasing tickets for a drawing held weeks or months in the future. But innovations in the 1970s gave rise to scratch-off games, which have much lower prize amounts and higher odds of winning, on the order of 1 in 4. These are a far more attractive proposition than waiting for a big jackpot that might be weeks or months away, so they have grown dramatically since then.
As a result, most state lottery revenues come from lotteries, with relatively few coming from general taxation or other sources. These revenues have given states the flexibility to expand their social safety nets without the sting of a new or higher tax rate on middle-class and working-class residents. This arrangement is likely to continue for as long as lotteries can generate enough revenue.
There is an ugly underbelly to this arrangement, though. Studies show that lottery participation disproportionately consists of people from middle- and upper-income neighborhoods, with the poor participating at a proportionally lower level than their share of the population. In addition, the winners of large lottery prizes are overwhelmingly middle- and upper-income people.
So while the lottery is a useful source of revenue, it should not be considered a panacea for all state budget problems. The public must be made fully aware of the real costs of this form of gambling, and how much it is contributing to the growing inequality in the nation. This may be a tough sell, but it is important for the future of democracy. The alternative would be to continue on the path we are on, where the richest and wealthiest get more of what they want and the rest gets less. That is a recipe for disaster. For more on this topic, read the full article by Richard Wiseman. Richard Wiseman is an author and documentary filmmaker who has won numerous awards for his work. He is a senior fellow at the Media Institute for Sustainable Development and a founding board member of the Global Footprint Network.