Lottery is the most popular form of gambling in America and people spent upwards of $100 billion on tickets last year. State governments promote it as a way to help the poor and raise revenue, but there’s more to it than that. State lotteries also raise the question of whether they are fair to the rest of us.
The first recorded lotteries in Europe were held in the Low Countries in the early 15th century. The town records of Ghent, Utrecht, and Bruges show that these lotteries raised money for the poor and town fortifications. Unlike the modern games we know and love, these lotteries did not require buying tickets but rather the drawing of lots for prizes.
By the late 1600s, lotteries were common in England and the United States. These private and public lotteries financed roads, canals, bridges, buildings, churches, colleges, and many other projects. They were a favorite means of raising money for the arts as well as public utilities and local government expenses.
But lottery abuses undermined their popularity and weakened the arguments of their defenders. Even so, between 1744 and 1776, several hundred lotteries were sanctioned. They helped fund the building of the British Museum and a wide range of construction and renovation projects in the colonies, including the purchase of a battery for defense of Philadelphia and the rebuilding of Faneuil Hall in Boston. They were also used for charity and to fund the American Revolution, though this attempt was ultimately unsuccessful.
State lotteries are a major source of government revenues, but they are not as transparent as a normal tax. Consumers don’t usually consider that a portion of their ticket price is being earmarked for government use, and they don’t think about how much the prize money may actually reduce the percentage of the total sales that goes to the state. State officials are careful not to emphasize this point because it would undermine the idea that the lottery is a good source of revenue.
To keep ticket sales robust, the state must pay out a significant percentage of sales in prize money. This, of course, decreases the percentage of total sales that’s available to the state for things like education, which is the ostensible reason why they have lotteries in the first place. State officials know that the message they are sending is off, but they can’t change it without alienating their core audience of low-income people who buy a lot of tickets. Unless they want to lose them all, it’s time for a serious conversation about the purpose of the lottery. And it’s not about arguing that everyone should be forced to play, but about whether a tax on tickets is justified.