Should State Governments Run a Lottery?
The lottery is a popular form of gambling wherein numbers are drawn to determine a winner. While casting lots to make decisions or even to determine fates has a long history (including in the Bible), the modern state-sponsored lottery began only in the 18th century. Since then, it has become a major source of public funding for many projects.
However, while there is a strong desire to win the jackpot, most people buy tickets only because they believe it will provide them with entertainment value or some other non-monetary benefit. They do not buy tickets because they are a good investment, as evidenced by the fact that lottery play tends to fall as income levels rise. The purchase of lottery tickets thus can not be accounted for by decision models that maximize expected utility.
As a result, the decision to buy tickets can only be interpreted as irrational, and the fact that people do so raises questions about whether or not state governments should run lotteries. In particular, it is not clear that a lottery promotes the social welfare of those who play, and there are concerns about its impact on the poor, problem gamblers, etc. In addition, there is a concern that the promotion of gambling can conflict with other state functions, such as raising revenue for education or highways.
In its current form, a state lottery is typically a state-run monopoly with a limited number of games. Its history, though, is a tale of growth and decline, with state officials often succumbing to the temptation to expand the product line in order to maintain or increase revenues. The first lottery games were very similar to traditional raffles, with the public purchasing tickets for a drawing that would occur some time in the future. Since the 1970s, innovations in the industry have led to a proliferation of new games.
State lotteries have also been promoted as a way for the government to raise money without the stigma of a tax. Nevertheless, there is no guarantee that the funds generated will be used as intended. In fact, in some cases, state lottery revenues have been squandered on everything from bridge repairs to university endowments.
In any case, the question remains as to whether or not lottery games are appropriate to fund state operations, especially in a political climate that is intensely anti-tax. The state’s dependence on this type of “painless” revenue is a classic example of policymaking being done piecemeal, with little or no overall oversight. The result is that the lottery, despite its illegitimate status as a tax avoider, is often running at cross-purposes with the state’s other public goals. It is, therefore, an interesting and important topic for further study. Until then, we can only hope that more state leaders take the issue seriously and push for greater oversight of the lottery. This will not only help to ensure that the money raised is being spent wisely, but it will also keep lottery games in their proper place as a fun and harmless form of entertainment for all.