Raising Money Through the Lottery

The casting of lots for decisions and fates has a long record in human history, including several instances in the Bible. But lotteries as a method of raising money for public projects are considerably more recent. The first state-run lottery of the modern era was inaugurated by New Hampshire in 1964, and thirteen states followed in a few years. This expansion occurred, Cohen writes, at a moment when burgeoning state debt and a soaring population made it increasingly difficult for state governments to balance their budgets without raising taxes or cutting services. Lotteries offered states a source of painless revenue, and the idea of standing on stage in front of an oversized check for millions of dollars appealed to voters and politicians alike.

While Cohen nods to the early history of lottery, he focuses chiefly on its modern incarnation. The emergence of the state-run lottery in America coincided with, and was fueled by, the nation’s late twentieth-century tax revolt. In addition to the fervor of antitax sentiment, the lottery boom was propelled by a growing awareness that there was big money to be made in gambling and by the sluggish growth of traditional forms of tax-based revenue.

Despite the widespread belief that lotteries are “a form of gambling,” he argues, they actually are not. Rather, they are a form of civics and of community. “People buy tickets not because they are addicted to gambling, but because they want to be part of a larger social community that rewards its members for their efforts,” he writes. That sense of community is one reason why many people who play the lottery continue to do so, he adds, even as they complain about the increasing cost of prizes and the difficulty of winning.

In an attempt to broaden their revenue base, many state lotteries have teamed with sports teams and other companies for prize giveaways. While these merchandising deals benefit the companies through product exposure and advertising, they can also increase the popularity of a particular lottery. As a result, some lotteries have begun offering scratch-off games that feature products such as automobiles and television shows.

Nevertheless, it remains true that the majority of lottery players are from middle-income neighborhoods and that participation drops off with education level. This has led some to argue that lottery revenues are disproportionately tapped by low-income communities. Other researchers have argued, however, that income differences are masking the fact that lottery participation is generally declining across all socio-economic groups. This, in turn, may be making the lottery less effective as a source of public revenue.