The Benefits and Critics of Lottery Revenue

In a lottery, one randomly chosen ticket wins a prize. The concept is an ancient form of gambling and has a long history in the West, from the time of Augustus Caesar for municipal repairs in Rome to the first public lottery in 1466 in Bruges for distributing money for the poor. Regardless of the type of lottery, the basic elements are the same: a pool of money is established; tickets are sold; and each ticket is marked with a unique number. The winnings of each ticket are then returned to the pool in proportion to its share of the total prize money.

Lotteries are generally hailed as a source of “painless” revenue, allowing legislators to avoid a contested ballot and to raise funds for a broad range of public uses. In the United States, for example, many of the country’s premier universities owe their origin to lottery proceeds, including Harvard and Yale.

Nevertheless, critics argue that lottery revenues are mismanaged and ineffective in achieving their purported social benefits. For instance, some argue that the earmarking of lottery funds for a particular purpose — such as public education — simply allows the legislature to reduce by the same amount its regular appropriation from the general fund.

Moreover, critics point to the fact that lottery revenues typically increase dramatically after they are introduced, then level off and even decline. They also criticize the constant introduction of new games in an attempt to maintain or increase revenue. Finally, they note that the industry relies on a small group of heavy users, often referred to as super users, who buy large numbers of tickets.