Rethinking the State Lottery

In the nineteen-sixties, as American prosperity began to wane, states were casting around for ways to balance budgets without raising taxes or cutting services—and without antagonizing an antitax electorate. The answer, in a few states, was the state lottery.

The state lottery is a multibillion-dollar enterprise, pulling in about $62 billion in sales last year and spending some $20 billion on prizes and operating costs. That left states with about 62 cents in prizes and state revenue per ticket, which they disperse to a wide variety of programs and services, from education to social services.

Lotteries have broad public support, and the money they raise helps many people, including convenience store owners (who often serve as vendors for the games) and lottery suppliers (heavy contributions by such firms to state political campaigns are regularly reported). In addition, in states where the proceeds are earmarked for schools, the lotteries have built up extensive specific constituencies: teachers (whose schools rely heavily on lottery revenues); parents who cling to the notion that their kids’ schools are being “subsidized by gambling”; and state legislators accustomed to seeing their campaign coffers swell with lottery money.

But critics argue that the state lottery has only limited value and preys disproportionately on poor and working-class purchasers. In fact, studies have found that there is a strong correlation between lottery sales and poverty rates. And some states are now starting to see that the lottery is a costly misadventure, and are rethinking their lotteries.