A lottery is an opportunity to win a prize by chance, typically through the drawing of lots. The casting of lots has a long record in human history, going back at least as far as the Bible, and has been used for everything from determining fates to choosing the next king of Egypt. More recently, it has been used for material gain. Lotteries have been popular in Europe and America, where they were a common way to finance public works projects, such as building the British Museum, and even to help settle the American colonies, despite strong Protestant proscriptions against gambling.
A key feature of a lottery is that people are willing to pay for a ticket, even though they are aware that their odds of winning are long. This is because the total utility (the sum of all the non-monetary and monetary gains that the lottery participant expects to receive) from playing exceeds the disutility of a monetary loss.
Lottery revenues can increase dramatically after the lottery is introduced, but then they level off and may even decline. This is because people tend to become bored with the game, and the introduction of new games is crucial for maintaining and increasing revenues.
Cohen notes that in the late nineteen-seventies and early nineteen-eighties, as the country entered a period of economic crisis, state lotteries became increasingly popular as a means to raise revenue without incurring the political cost of raising taxes. This coincided with a period of rising income inequality, falling job security and pensions, and skyrocketing health-care costs and inflation, which eroded the real value of people’s savings and retirement accounts. In this environment, the lure of unimaginable wealth — as portrayed in lotteries’ ad campaigns — took hold, and “the long-standing national promise that education, hard work, and financial security would enable children to be better off than their parents” faded.
The legalization of state lotteries began with New Hampshire in 1964, and many other states followed suit as the nation’s tax revolt accelerated. Lottery advocates, unable to argue that a lottery floats the entire state budget, instead began advocating that it would pay for a single line item, invariably a popular and nonpartisan government service, such as education, or elder care or public parks, or aid to veterans.
This strategy allowed the lottery industry to appeal directly to specific constituencies, including convenience store operators (the primary vendors for state lotteries); lotteries’ suppliers (who often make heavy contributions to state political campaigns); teachers in states where lottery proceeds are earmarked for education; and, of course, state legislators who benefit from lottery revenues. But it also allowed critics to focus attention on lottery policies that might be problematic, such as the regressivity of the gambling tax and its potential impact on lower-income groups. This has made it difficult for the public to embrace the idea of a state-run lottery as a genuinely good thing.