The state lottery gives participants the chance to win huge jackpots while providing states with funding for education, transportation, and other projects. But it’s not without its critics. Some complain that lotteries encourage gambling addiction, while others argue that they are simply a poor substitute for tax cuts and budget reductions. And many states have adopted policies that seek to address these concerns, such as requiring all winning tickets to include a toll-free gambler’s help hotline number.
After paying out prize money and covering operating costs, the states keep a big chunk of the revenue from ticket sales. In the fiscal year 2021, New York took in $370 for every resident, Florida and Rhode Island did even better, and California and Massachusetts collected more than $25 billion combined.
It’s no surprise, then, that the amount of prize money varies greatly from state to state. Some of the difference comes from overhead, such as retailer commissions and advertising expenses, but other factors also come into play, such as the way that state governments allocate the lottery’s revenue.
In New York, for example, between 40 and 60 percent of the lottery’s proceeds are earmarked for prizes, while 25 to 45 percent is devoted to a variety of other state programs and services, such as school aid and certain instant games that are earmarked for the city’s anti-crime division. Those allocations create pressure on lottery officials to pursue “new marketing, glossier colors on scratch tickets, whatever it takes to keep the numbers up,” as one state lawmaker recently put it.