Lottery – An Alternative to Raising Taxes


A lottery is a form of gambling in which people bet on numbers that will be drawn. It is often organized so that a portion of the profits go to “good causes.” Lotteries are popular and generate significant revenues for states. Nevertheless, they attract considerable criticism, mostly because they encourage compulsive gambling and have been accused of having a regressive effect on lower-income households. State governments often struggle with how best to raise revenue. Many have sought to expand the array of services they provide without heavy burdens on middle- and working-class taxpayers. Lotteries have proven to be a relatively painless alternative to raising taxes.

State lotteries have become increasingly common in recent decades. Originally, they were launched in regions with larger social safety nets that needed extra income. Those early supporters saw the potential of a comparatively low-risk, high-reward mechanism for raising money to fund state programs. State officials also hoped that lotteries would make it possible to eliminate taxes altogether or at least reduce the rates for middle- and working-class residents.

As lotteries have evolved, they have cultivated broad and devoted constituencies, including convenience store operators (who are the main vendors); suppliers of state-approved products; teachers (in states in which the proceeds are earmarked for education); and state legislators, who quickly become accustomed to the additional revenue. Lotteries also advertise themselves as an alternative to more painful forms of taxation.

Lotteries have become popular with the general public, and they are promoted in a variety of ways, including through radio and television commercials, Internet ads, and billboards. The messages they convey are that the prizes are large, the tickets are cheap, and that one’s chance of winning is a small percentage of the overall number of tickets sold. In addition, lotteries emphasize that they are run as a business and that the goal is to maximize revenue.

The practice of making decisions and determining fates by lot has a long history, starting with Moses being instructed in the Bible to divide land among the Israelites by lottery. The Roman emperors used lotteries to give away property and slaves. Even today, some dinner parties use a lottery-like arrangement, called the apophoreta, in which guests receive pieces of wood with symbols on them that they then put into a container to be redrawn at the end of the meal for prizes such as cash or goods.

While the redrawing of lots in the apophoreta is largely ceremonial, modern lotteries are generally based on a system of randomly selecting winners from eligible ticket holders. Prizes range from a small cash amount to a substantial sum of money for a specific product or service. In a typical lottery, the total prize pool includes the money awarded to the winner, profit for the promoter, and costs associated with the promotion of the event. In some lotteries, the prize amounts are predetermined. In other lotteries, the prize amounts are determined by the total value of all the tickets sold.