In a lottery, people pay a small sum of money and then receive prizes depending on the numbers they select. Prizes range from a free television to cash, vehicles and even houses. Lottery games have become popular in many countries. Lotteries are also used to allocate housing units in subsidized housing complexes and kindergarten placements at reputable public schools. The lottery is often promoted by government officials as a painless way to raise revenue. The first state to adopt a lottery was New Hampshire in 1964. Others followed suit in the years that followed.
In almost every case, the principal argument for adoption of a lottery has been that it will provide a source of “painless” revenues to finance a wide variety of state uses. This is a particularly attractive proposition to politicians because voters want the states to spend more, and they do not object to taxes paid through lotteries, which they consider a voluntary expenditure of money by players who are rewarded with prizes for their contribution.
But this picture of the lottery as a benign source of public revenues masks an important problem. As we will see, the underlying dynamics of the lottery create conditions that are inimical to the long-term health of its operations.
The casting of lots for the distribution of property has a long history in human societies, going back at least as far as biblical times. The practice became more formalized in ancient Rome, where the Roman emperors distributed property and slaves by lottery. And the game became widespread in colonial America, where it played a key role in financing private and public ventures, including the founding of Harvard and Yale.
Nevertheless, the lottery has a number of major weaknesses. One of them is the fact that its revenue growth tends to sag, especially after a few years. The result is that the lottery must continually introduce new games to maintain or increase its revenues.
Another serious issue is the tendency of lottery administrators to focus on their own constituencies and neglect the needs of the general public. Frequently, lottery administrators will develop extensive specific constituencies in the form of convenience store owners (to whom the lottery usually sells the most tickets); vendors of the machine equipment; teachers (in states where lottery proceeds are earmarked for education); and state legislators (who quickly learn to depend on the revenues).
In addition, the evolution of state lotteries is often piecemeal and incremental, with little or no overall policy framework. This situation has the effect of fragmenting authority and preventing the formation of a lottery policy that would take the overall public welfare into consideration.
