Lottery Funding and Public Policy


Whether it’s the jackpots of Powerball and Mega Millions or the tiny numbers on a ticket in keno, people like to gamble. This is an inextricable part of our human nature. But as it relates to state-sponsored lotteries, the gambling impulse is often at odds with other public policy goals. Lotteries are a form of state-sponsored gambling in which players purchase numbered tickets, and the winner is determined by chance. There are 44 states and the District of Columbia that run lotteries. The six that don’t—Alabama, Alaska, Hawaii, Mississippi, Utah, and Nevada (home of Las Vegas)—don’t do so for a variety of reasons, including religious objections, the fact that they already allow gambling and don’t want another lottery to cut into their profits, or “fiscal urgency.”

Since the early days of the American Revolution, when Benjamin Franklin tried to use a lottery to raise funds to buy cannons, there have been many attempts at raising money via gambling. But lotteries gained momentum after the war, when states faced large budget deficits and a general antipathy to taxation. State governments saw lotteries as a way to increase government spending without burdening voters with additional taxes.

Lotteries have long been marketed to the public as a source of “painless” revenue, meaning that the money from the game comes from participants who are voluntarily spending their own money. It’s a message that has proven effective, especially during times of financial stress when the prospect of increased taxes and cuts in government services can be particularly vexing. But studies have shown that the popularity of lotteries is not related to the objective fiscal health of a state; they gain widespread support even when a state’s government is in sound financial condition.

One reason for this is that lotteries tend to promote the message that participation is a civic duty. This is particularly true of lotteries that fund education, because there is a perception that those who play the lottery are helping the state educate its children. But it is a misleading message. There is no evidence that state educational outcomes are improved by lottery proceeds, and research shows that lottery play decreases with income.

It is also important to remember that, unlike other forms of gambling, lotteries are run as businesses and have a profit motive. This means that advertising must focus on enticing the maximum number of people to spend their money. Consequently, the ad messages tend to exaggerate the chances of winning and downplay the risks. This can have unintended consequences for the poor, problem gamblers, and other vulnerable populations. In addition, because lotteries are run as businesses, they can be at cross-purposes with other public policies. This is a dangerous dynamic and needs to be addressed. The ad messages that promote lotteries must be changed, and the goals of lotteries must be aligned with those of other public institutions. Otherwise, it will be difficult to justify their continued existence. To do so, it will be necessary to address the root causes of public distrust of gambling.