The Truth About Lottery Revenues


A lottery is a form of gambling in which participants pay a small amount of money for a chance to win a large sum. The game’s roots can be traced to ancient times: Moses was instructed by the Lord to take a census of Israel and divide land among the people by lot; Roman emperors used to give away property and slaves by lottery; and even in medieval Europe, citizens would gamble for prizes, including food, wine, and books.

During the immediate post-World War II period, when state budgets were expanding rapidly and there was little concern about gambling’s social costs, it made sense for states to expand their array of services through lottery revenues, which were relatively inexpensive compared with other sources of revenue. Lottery revenues were also expected to help reduce the reliance on sin taxes like alcohol and tobacco, which tend to have far greater social costs.

The main message that lottery advertisements convey is that playing the lottery is fun. This obscures the regressivity of the games and reveals a belief that everyone should play because of the good it does for society. This message is reminiscent of sports betting, in which the government promotes it to be a civic duty because it raises funds for the state.

In reality, the state’s only benefit from lottery revenues is the income it receives after paying out prize money and covering operating and advertising costs. Even then, the percentage of state income that it represents is very low.