Public Policy and the Lottery
A lottery is a way of awarding prizes, usually money or goods, by means of chance. The term is derived from the Dutch noun lot meaning “fate.” The first modern state lotteries were introduced in the United States in 1964, and have become an important source of revenue for many government agencies. The emergence of the lottery is a classic case of public policy made piecemeal and incrementally, with authority fragmented between executive and legislative branches. In the long run, this has contributed to a growing dependence of state governments on a form of gambling that is not easily managed.
The lottery is also a popular method of raising funds for charities and other public usages. In the 17th century it was common in Europe to hold lotteries to raise money for town fortifications, and for helping the poor. In the early American colonies, a number of lotteries were introduced to support the Revolutionary War. In the early days, Alexander Hamilton argued that lotteries should be kept simple and that “Everybody… will be willing to hazard a trifling sum for the hope of a considerable gain.” The idea proved correct, and lottery-like operations became highly popular in the United States as a painless way to pay for a variety of public projects.
In modern times, state governments have adopted a variety of strategies for organizing and managing the lottery. Some, such as Massachusetts and New Hampshire, have even imposed regulations on the sale of tickets to protect against gambling addiction and other harmful practices. The overall results of these efforts have been mixed. However, most experts agree that the success of the lottery depends on a delicate balance between attracting large numbers of participants and keeping those numbers in control.
Despite the controversies surrounding gambling, most Americans have been willing to play the lottery. It is estimated that about 60% of adults report playing at least once a year. This is in part due to the fact that there are some very large prizes on offer. The odds of winning the Powerball jackpot, for example, are one in 55,492.
Another reason for lotteries’ popularity is that they help to alleviate pressure on government finances caused by budget shortfalls. Lottery revenues have been a reliable source of revenue for many state legislatures and executive branch administrations, and there is strong political pressure to increase the size of prize monies and the overall size of the lottery.
The way state lotteries are structured, about 50%-60% of ticket revenue goes toward prize money. The remainder is divided between administrative costs and vendor fees, and for a variety of other state-designated purposes. Generally, the largest share of this funding is directed toward public education. Other significant allocations include prisons, social welfare programs, and infrastructure projects such as roads and bridges. A smaller share is earmarked for military veterans and other special interest groups.