Is It Time to Declare the Lottery Industry Winners?

Amid the general gloom and doom about state budgets, lottery advocates point to the growth of the games as a bright spot in the fiscal picture. They say they help provide important public goods such as education. But a close look at the economics of lotteries, however, suggests that it’s far too soon to declare them winners.

Lotteries are a form of gambling that offers a chance to win big money based on random selection of numbers. The prizes are usually a combination of small and large jackpots, with a portion of proceeds going to the organizers and the state. The remaining sum is available for the winners. Generally, the more expensive a ticket is, the higher its chances of winning.

Across the country, Americans spend billions on lottery tickets each year. The vast majority of players are low-income, less educated, nonwhite and male. The games are a key source of income for these groups, and they often see the proceeds as their last, best or only hope at a better life.

When a state adopts a lottery, it legislates a monopoly for itself; hires an agency or public corporation to run the game; establishes a modest number of relatively simple games; and then progressively expands in size and complexity. As the industry evolves, debate and criticism shift from the broader question of whether a lottery should be legal to specific features of its operations, including problems of compulsive gambling and its alleged regressive impact on lower-income populations.