How Big a Dent Does the Lottery Make in State Budgets?


Lottery is a form of gambling in which tokens are distributed or sold, with the winners determined by chance. It’s one of the most popular forms of gambling in the United States. Whether that’s because it dangles the promise of instant wealth or because it’s a way to fund state programs, it’s a fixture in American culture. But just how big a dent it makes in broader state budgets and what kind of trade-offs people make by spending so much money on tickets is worth considering.

In the early post-World War II period, many states promoted the lottery as a way to increase their social safety nets without raising taxes on the middle and working classes. But now, with the costs of a larger social safety net ballooning and the number of people who are pushed out of their homes due to rising prices, it’s time to reexamine that arrangement.

All lotteries have several elements in common. First, there must be some mechanism for recording the identities of bettor’s and their staked amounts. This may take the form of a pool of numbered tickets or their counterfoils to which all bettors contribute. Then, the tickets must be thoroughly mixed, either by hand or through mechanical means such as shaking or tossing. Finally, the winning numbers or symbols must be drawn at random, a process that requires little prior knowledge. Increasingly, computers are used for this purpose.

Most lotteries also feature a prize pool that is announced and advertised in advance. The prizes may be a single large sum or a series of smaller prizes. The size of the prize pool has a strong effect on ticket sales and the likelihood of winning. In fact, when prizes are announced and advertised in advance, they often sell more tickets than if they were kept secret.

In addition to promoting the prizes and their sizes, lotteries must provide a mechanism for selecting winners. This may take the form of a numbered receipt entitling the bettor to a specified portion of the prize pool or a lottery computer that selects winners at random. Some lotteries also allow the bettor to choose his own numbers.

While most people do play the lottery because they like to gamble, there are two other messages that lotteries rely on in order to keep people playing:

The first is to remind people that the lottery doesn’t discriminate – it doesn’t matter if you’re black, white, Hispanic, Mexican, Chinese or Republican. It just matters if you pick the right numbers. The second message is to convince people that they’re doing their civic duty by buying tickets. But the actual amount of revenue that is raised by the lottery in comparison to total state revenues is tiny. In fact, it’s less than a tenth of what is spent on lottery advertising. So, the real message is: If you play the lottery, you’re supporting children. And if you’re not winning, don’t worry; it’s just a game.