Public Policy and the Lottery


A lottery is a form of gambling in which a number of tickets are sold for the chance to win a prize, typically a sum of money. It may be used to raise funds for a variety of public and private ventures. Examples include subsidized housing blocks or kindergarten placements. Other popular lotteries are based on sports or are simply games that dish out prizes to paying participants.

State lotteries have become a major source of revenue in the United States. In recent decades, they have expanded rapidly to meet the demands of a growing public appetite for the excitement of winning big. Despite the enormous popularity of these games, they are not without their critics. This article outlines some of the main issues surrounding them.

Lotteries are a classic example of the way that public policy is made in the United States, in which decisions are often made piecemeal and incrementally. Typically, when a state adopts a lottery, it legislates a state monopoly for itself; establishes a public corporation or agency to run it; begins with a small number of relatively simple games; and then, as demand for the game increases, progressively expands its operations by adding new games.

Moreover, once a lottery is established, its revenues are often seen as essential for the maintenance or expansion of a range of important public services. This view is particularly prevalent in times of economic stress, when the lottery’s support for specific public goods such as education is most pronounced. But studies have shown that the popularity of lotteries does not depend on a state government’s objective fiscal condition, and the lottery has gained broad public support even in times of relative prosperity.

In addition to generating substantial revenues for public services, the state lotteries also tend to promote themselves as a means of helping to alleviate poverty and other social problems. For this reason, they tend to target poor and lower-income communities. This is a similar strategy to that of sin taxes on alcohol and tobacco, which are likewise argued to be necessary to help curb social vices and protect the health of the population.

While the public benefits of lotteries are clear, they can also be deceptive. One issue is that the advertised prizes are typically much lower than the total amount of money that is paid in by ticket-holders. Another issue is that the games themselves are often perceived as a scam. The truth is that lottery players are not getting rich, and they are unlikely to do so by buying a single ticket. However, many people do not realize this and continue to play, holding on to the nave belief that there is a tiny sliver of hope that they will eventually win. This is a classic example of the “fallacy of the nave optimist.” Those who believe this fallacy are more likely to be prone to risk-taking behaviors such as gambling and investing. They are also more likely to be impulsive, and to take risks that they would not otherwise take.