Public Policy and the Lottery

The casting of lots to determine fates and obtain material possessions has a long history in human culture, and many a lottery has been used to distribute government funds for everything from municipal repairs to constructing the Great Wall of China. State lotteries have a more recent history, but they have grown in popularity with increasing frequency since New Hampshire started the trend in 1964 and has been followed by 37 states to date.

These days, lotteries promote themselves in two ways. First, they accentuate the experience of scratching a ticket, which they suggest is a fun and novel way to spend time. This approach obscures the regressivity of lottery spending, and it also makes people forget that they are putting a substantial share of their income into an exercise that has an extremely long shot of paying off.

Secondly, states have shifted to a more publicized message that the money raised by lottery games helps a variety of good causes. This is more palatable to voters than a purely commercial message and it allows lotteries to attract more participants. The problem with this approach is that it has no bearing on the overall cost of running a lottery, which is far more expensive than the small amounts of money awarded through prizes.

A third and final issue concerns the way in which lottery commissions have manipulated public opinion to maintain their revenue stream. By promoting their operations as helping the poor, they have created an incentive for people to buy tickets. This has the effect of obscuring the regressivity of the lottery and, because of its popularity, it has kept the industry growing even as it is no longer an effective means of raising revenue for government operations.

In addition to attracting large numbers of players, lottery officials also cultivate specific groups of supporters: convenience store owners (lotteries are the primary source of instant win products); suppliers of equipment and services to lotteries (whose executives are heavily involved in political campaigns); teachers (in states where lotteries raise money that is earmarked for schools); and politicians who become addicted to the steady stream of cash. The evolution of lottery policies, therefore, is a classic example of how public policy is made piecemeal and incrementally with no general overview and little or no consideration of the broad public interest.

It is not hard to see why this happens. In the era of mega jackpots, the odds of winning are so ridiculously high that it is easy for people to justify spending huge portions of their incomes on lottery tickets. They can tell themselves that they are buying into a meritocratic belief that they will get rich in the rare event that they do win, but the truth is that rich people buy fewer lottery tickets than poor people and, when they do play, they make smaller purchases. The result is that, despite the fact that the actual odds of winning are staggeringly low, Americans spend $80 billion on lottery tickets each year.