Public Policy and the Lottery
Across the United States, billions of dollars are spent each year on lottery tickets. Some people play for fun; others believe the lottery is their only chance of a better life. But how exactly does it work? And does it make sense for governments to promote gambling?
Lotteries are state-sponsored games in which players purchase tickets for a chance to win a prize based on random selection. The prizes are usually cash or goods. In some states, a portion of proceeds from ticket sales is earmarked for a specific public good. Lotteries are often criticized for their perceived regressive effects on low-income households, but there is considerable debate over whether this is actually the case.
In the United States, most state governments enact laws regulating lotteries. In addition, most have lottery divisions that select and license retailers, train employees of those retailers to use lottery terminals and sell and redeem lottery tickets, pay high-tier prizes, and assist retail outlets in promoting the games. In some states, the state legislature delegates authority to a special commission or board to operate the lottery.
The earliest lotteries probably originated in the 15th century, when towns in Burgundy and Flanders sought ways to raise money for defense needs or to help the poor. Francis I of France introduced lotteries in the 1500s, and they became very popular in Europe. But Louis XIV managed to win several prizes, and the popularity of lotteries began to decline.
Lotteries came to the United States with colonists, who used them to finance a variety of private and public projects. In Philadelphia during the Revolution, Benjamin Franklin sponsored a lottery to raise funds for cannons to defend the city from the British. After the war, state lawmakers adopted lotteries to help finance a wide range of government services.
Today, lottery advertising focuses on the excitement of playing and the potential for big winnings. But behind the hype is a complicated set of economics, ethics, and public policy concerns. State lotteries are a classic example of how public policies are made piecemeal and incrementally, with little overall oversight. And once a lottery is established, it is extremely difficult to change its basic operations.
Lotteries have a profound effect on the lives of many Americans. They are the ultimate example of how a market mechanism can have unforeseen negative social consequences, especially for those most vulnerable in society. Those consequences are often invisible, but they are real and far-reaching. Unless we are careful, the future of our nation will be deeply impacted by these hidden costs. As it is, our current system of lottery regulation is at cross-purposes with the public interest. The fact is, it may be time for a new approach. We must stop rewarding bad behavior and start valuing the true value of our citizens.