Lottery Funding and Policy Implications

Lotteries are games where a prize (usually money or goods) is allocated to winners by chance. They are popular with the public, are a relatively low-risk way for governments to raise money and can have a positive effect on the economic environment. However, they are not without drawbacks, including the risk of addiction and their regressive impact on poorer households. This article explores the evidence on these issues and discusses some policy implications.

Many states have used the lottery as a way to fund various projects, both public and private. In colonial America, lotteries played a large role in funding schools, roads, canals and bridges, as well as churches and libraries. The Continental Congress held a lottery to raise funds for the Revolution, and a number of private lotteries were also held, such as one organized by John Hancock in 1761.

When lottery proceeds are seen as benefiting a specific public good, such as education, they can enjoy broad public support and be an effective source of revenue for state government. Indeed, the popularity of lotteries has been demonstrated to be independent of a state’s actual fiscal condition, as they have consistently received high levels of public approval even in times of budgetary stress.

Nevertheless, lottery commissions are moving away from the message that the money raised by lotteries is “good for the state”. Instead they are promoting two messages: one is that playing the lottery is fun, and the other that it’s a civic duty to buy a ticket. Both of these messages are coded to reinforce compulsive gambling behavior, and obscure the regressive nature of lottery play.