Lottery Revenues and Public Education

Most states have a lottery, in which people purchase tickets for a chance to win a prize ranging from a few dollars to a large jackpot. It’s the most popular form of gambling in the country. State governments promote the lottery by touting it as a way to raise revenue without raising taxes. But how meaningful that revenue is to state budgets, and whether it’s worth the trade-off to people who lose money on tickets, is an open question.

Most lotteries offer a number of games, including instant-win scratch-off tickets and daily drawings in which players choose numbers from one to fifty. Each game has its own rules and prizes, but they all have the same basic structure. The bettors sign their names and the amount they stake on a ticket, which is then shuffled and entered into the drawing. The winning numbers are selected at random, so each bettor has the same chance of winning as any other bettor.

Lottery proceeds are often earmarked for certain programs, such as public education. But critics charge that this practice is misleading. The money earmarked for education simply reduces by the same amount the appropriations the legislature would have had to allot from the general fund for that purpose. The legislature then has more discretion in how to use the remaining funds, which can go for anything from paving roads to subsidizing political campaigns.

The roots of lotteries date back centuries, but modern state-based lotteries began in the 1960s. In the early days, lotteries were simple raffles, in which the public purchased tickets that had a fixed price and the chance of winning a prize in a future drawing. But innovations in the 1970s radically changed how the games were played and how they raised funds. The most important change was the introduction of “instant” games that offered lower prizes, but with much higher odds of winning (on the order of 1 in 4). The games became very popular, and revenues boomed for several years.

Today, lotteries are far more complex than the traditional raffles of old, but they still rely on similar elements. They advertise heavily to generate initial enthusiasm and sustain long-term interest, promoting the idea that anyone can win and generating a sense of competition among potential winners. They also appeal to specific constituencies, such as convenience store owners who sell the tickets; lottery suppliers who make heavy contributions to state political campaigns; teachers in states in which lottery proceeds are earmarked for education; and state legislators, who quickly grow accustomed to the extra cash flowing into their coffers.

State officials argue that lotteries benefit everyone by raising needed funds for education and other public services. But critics charge that the results are mixed. For example, studies have shown that lotteries draw participants from middle-income neighborhoods to a greater extent than they do from low-income areas. In addition, the wealthy are more likely to play and to buy multiple tickets.