In the past, lotteries have been a common means of raising funds for everything from building public works to paying for education. The principal argument for a state lottery is that it is “painless revenue.” In other words, the general public pays in a voluntary way to fund services that they would be taxed for otherwise. Voters want states to spend more, and politicians look to lotteries as a way to get taxpayer money for free. This dynamic has driven the revival of lotteries, starting in New Hampshire in 1964 and spreading rapidly across America.
While the casting of lots for spiritual rewards has a long record (including several references in the Bible), it is only in the last few hundred years that lotteries have become a popular means for material gains. Today, the lottery is a multibillion-dollar business with state governments eager to promote it as a source of tax relief. Yet many observers argue that, despite its popularity among ordinary people, the lottery is not a good or even ethical form of taxation.
The lottery is a form of gambling in which a prize is offered for the chance to guess numbers on a grid, with the winning number being the first drawn. A wide range of prizes is possible, from cars to homes to cruises to trips abroad. The lottery is similar to the modern slot machine, which is a game of chance that involves pulling a lever and watching numbers appear on a screen. Unlike traditional casinos, which have rules governing how much a player can win and how often they can play, state-sponsored lotteries operate in an environment of loose regulatory standards.
When states began promoting lotteries again in the late twentieth century, critics raised concerns about racial and economic injustice. Lotteries, these critics warned, subsidize disadvantaged groups while rewarding wealthier ones. Moreover, they are seen by some voters as a disguised tax, giving state officials an excuse to raise taxes.
In response, some supporters argued that lotteries were simply an alternative way to raise needed revenue. People were going to gamble anyway, they reasoned, so why not let the government reap the profits? This argument, writes Cohen, was a crucial factor in allowing New Hampshire and other states to establish the first modern lotteries.
While there is some truth to this argument, it does not tell the whole story. A more important issue is that state lotteries are not above availing themselves of the psychology of addiction. From the design of tickets to their advertising campaigns, lottery officials aim to keep players coming back for more. This is not inherently wrong, of course, but it is a function that usually falls under the purview of regulators. In the case of the lottery, it is not. As a result, state officials run lotteries at cross-purposes with the public interest.