The lottery might seem like a product of the culture that birthed Instagram and the Kardashians, but it has roots as old as America itself. It was once a popular way to raise money for everything from townships to college tuitions, and it even played a role in the American revolution, helping finance the English settlement of America despite Protestant proscriptions against gambling. In modern times, it’s often used as a vehicle for distributing public benefits—like roads and school funding—without the need for a direct tax hike. But the true nature of lottery is far more complicated than a few digits on a ticket or a few tv screens in a studio.
A state-run game of chance offering a prize to those who play. Whether the prize is money or goods, the chances of winning are determined by the odds set by the governing authority, which may or may not be the government. Typically, the winners will be announced at a publicly-held event.
Historically, lotteries were a popular way to raise funds for a variety of purposes. They have been used for everything from building churches to paving streets, and they were popular in colonial-era America as well, with many of the proceeds benefitting local communities. They were so popular that the word “lottery” was adopted as an English translation of the Latin loterie, which referred to a drawing of lots for a prize—in this case, a sum of money or property.
Although some people use the word to refer to a general game of chance, most people who purchase tickets do so with the explicit understanding that they have a very small chance of winning. They’re not buying their own ticket with the intention of becoming compulsive gamblers, but rather with a vague hope that they might someday stand on a stage in front of an oversized check for millions of dollars.
One of the most important reasons that lottery sales are so robust is that they provide states with an easy way to increase or decrease taxes without risking voter wrath. During periods of economic stress, politicians can promote the idea that the proceeds from the lottery will allow them to maintain services without raising their own tax rates—a tactic that is particularly effective when those taxes are in the form of sales or income taxes. Lotteries have become a “budgetary miracle,” Cohen writes, allowing legislators to make revenue appear seemingly out of thin air.
When the economy is good, however, lottery revenues decline and state coffers shrink along with them. This is why lottery advocates tend to focus on promoting the ways in which the money raised by a lottery benefits specific public goods, such as education. During the tax revolt of the late-twentieth century, when state budgets sank to unsustainable levels, this argument proved extremely persuasive.
Some critics of the lottery suggest that it is a “tax on the stupid.” But this view is misguided for several reasons. First, as a practical matter, it is impossible to deny that lottery spending increases when incomes fall and unemployment grows, or when poverty rates are high. Second, lottery revenues are influenced by the same forces that shape all commercial products, such as housing prices or consumer spending. Finally, defenders of the lottery argue that it is unfair to criticize lottery players for not fully understanding how unlikely it is for them to win.