Public Benefits and the Lottery Industry

A lottery is a gambling game where players pay a small amount of money to be entered into a drawing for a prize, usually money. Most states offer some sort of lottery game, ranging from scratch-off games to daily games where players select three or four numbers. The game’s popularity is based on the fact that, in the rare instance that someone wins, the payout can be enormous. The biggest lottery jackpot in history was over a billion dollars.

Lottery advocates argue that it is a painless source of revenue for state governments, which can use the proceeds to provide a variety of public services without the need to raise taxes on middle-class and working-class citizens. However, this argument is flawed on several fronts. First, the vast majority of people who play lotteries are not compulsive gamblers. Rather, they buy tickets to escape their everyday lives and imagine themselves standing on stage holding an oversized check for millions of dollars.

Secondly, the amount of money returned to winners varies widely depending on the type of lottery and how it is run. For example, scratch-off games typically return between 40 and 60 percent to winners, while a typical numbers game returns slightly more than 50 percent. In addition, the cost of running the lottery and paying prizes is deducted from the pool. As a result, even when winnings are substantial, the net return to bettors is often less than the advertised percentage of the total pool.

Third, most lotteries are not run as public utilities but instead as private businesses that sell chances to win a prize for a fee. As a result, their primary function is to maximize revenues. This has the effect of putting them at cross-purposes with public welfare, which should be their primary focus. This is especially true when the lottery’s advertising tactics are examined. Often, the prize amounts are exaggerated to attract potential bettors. For example, a large jackpot is advertised on the cover of the lottery’s brochure or on billboards along the highway. Inflated prize amounts also increase the odds that a jackpot will roll over to the next drawing, which further drives ticket sales.

Lastly, the way that lottery policy is developed is problematic. It is often decided piecemeal, with no clear overall vision. Consequently, the lottery industry is constantly evolving, and the general public welfare is only taken into consideration intermittently or not at all. As a result, few, if any, state lotteries have a coherent “gambling policy” or even a “lottery policy.” Instead, they simply evolve from the incremental decisions that are made as each new lottery is introduced. This is a recipe for corruption and unchecked growth.