The Evolution of the State Lottery

state lottery

The modern state lottery traces its origins back to New Hampshire in 1964. Since then, 37 states and the District of Columbia have introduced lotteries, which have become a common state government revenue source. The adoption of the state lottery has followed a pattern that is strikingly similar across all these states. The arguments in favor of and against the lottery, the structure of the resulting lottery, and the way the operation of the lottery evolves, all show a great deal of uniformity.

A key element in the success of state lotteries has been their ability to gain broad public support by portraying them as a source of “painless” revenue, a form of voluntary taxation. This appeal is based on the perception that the proceeds from state lotteries benefit specific public goods, such as education. However, studies have shown that the relative popularity of the lottery is not necessarily correlated with the actual fiscal health of a state.

After a period of rapid growth, state lotteries often experience a “boredom factor” that leads to the introduction of new games in order to sustain revenues. Consequently, the overall level of state lotteries’ revenues has not risen significantly over the last several decades.

This chart displays taxes that have been withheld on winnings in all 50 states and the District of Columbia. It is important to note that the amount withheld will vary depending on your Federal filing status. It is important to consult with a tax professional before making any financial decisions.