Are Lottery Proceeds a Wise Use of Taxpayers’ Money?


A lottery is an arrangement in which prizes (often money) are awarded by drawing lots. Lottery participants typically pay a small sum to participate, and the prize money is determined by chance. The practice has long been popular, and it is a major source of funding for many public projects, including schools, hospitals, roads, and other infrastructure. Government-run lotteries also raise money for charitable purposes, such as medical research and education.

In an era of anti-tax sentiment, state governments have increasingly come to depend on lotteries as a way to raise revenue without increasing taxes. This dependency has created a number of significant problems. For one, it has led to a proliferation of games and an ever-growing emphasis on marketing, often at the expense of sound financial management.

Despite these problems, most states continue to operate their lotteries, which are usually run by a separate state agency that is legally and financially independent of the legislature and executive branch. Nonetheless, the evolution of state lotteries is often a classic case of public policy making that takes place piecemeal and incrementally, with little overall oversight or consideration of the impact on society.

There is no doubt that people like to gamble, and the fact that the winnings are largely determined by chance is a strong incentive for them to play. The real question is whether lottery proceeds are a wise use of taxpayers’ money.

A number of different factors influence the popularity and success of state-sponsored lotteries. One is that the proceeds are often earmarked for a specific public good, such as education, which appeals to people’s sense of obligation and fairness. This message is particularly effective during periods of economic stress, when the lottery’s popularity is often higher than in times of fiscal health.

Another factor is that lottery revenues tend to be relatively stable, meaning that they do not fluctuate with the state’s overall finances. This stability is attractive to legislators and state executives, who have a hard time justifying raising taxes during an era of anti-tax agitation.

Finally, there is an intangible element at work: the appeal of instant wealth. The glitzy publicity surrounding the jackpots of the Powerball and Mega Millions draws millions of potential players, especially those who are living paycheck to paycheck. These players are disproportionately lower-income, less educated, nonwhite, and male. Moreover, they tend to play more often, and their plays are more expensive. This makes them a target for marketing campaigns by the lottery’s marketers. In addition, these lottery players are often portrayed by the media as irrational dupes who have been sucked in by the lure of big prizes. This image has strengthened the arguments of those who oppose lotteries and made it harder for lottery advocates to make their case.