The lottery is a ubiquitous part of American culture, with Americans spending upwards of $100 billion on tickets every year. Lotteries promote themselves as a source of “painless revenue”: people voluntarily spend their money on a chance at winning, so states can use those funds for other purposes without raising taxes or cutting other programs. But how meaningful those lottery revenues are in the context of state budgets, and whether it’s worth the trade-offs to people losing their hard-earned cash, are questions worthy of scrutiny.
State governments run the lotteries as businesses, with the goal of maximizing revenues. That requires them to promote the game to as wide a range of potential players as possible, which has often meant exaggerating the odds of winning and encouraging irrational gambling behavior. Critics charge that this runs counter to the government’s obligation to protect the public welfare.
State officials have also become dependent on lottery revenues, and they face pressure to increase those revenues in an era of anti-tax sentiment. This leads to a series of pitfalls, including: promoting addictive gambling; expanding the pool of players; introducing new games like keno and video poker; and squandering the proceeds. Many of these issues can be traced back to the way in which state lotteries are established: as piecemeal, incremental policy decisions made by individual agencies. As a result, few, if any, state governments have a coherent “gambling policy” or even a lottery policy.