Lottery Revenues Pay For Public Services

In an era of shrinking government budgets and rising anti-tax sentiment, state governments have been casting around for solutions that won’t roil their electorates. One of the options they’ve seized on is lotteries, where proceeds from the sale of tickets are pooled to pay for a variety of public services. State lottery revenues typically expand dramatically after they are introduced, but then level off or even decline. This has forced lottery promoters to continually introduce new games to maintain and increase revenues.

The popularity of lotteries has coincided with a decline in financial security for the vast majority of working Americans. Since the nineteen-seventies, income inequality has widened, pensions and job security have diminished, health care costs have risen, unemployment has increased, and our long-standing national promise that hard work and education would make children better off than their parents has eroded. Lottery spending has risen in step, and sales of the games have disproportionately jumped in poor, Black, and Latino neighborhoods.

Defenders of the lotteries argue that people who play aren’t really aware of how unlikely it is to win, or that they enjoy it anyway. But these arguments are flawed. The fact is that the odds of winning are not only very small but also highly variable, depending on how many tickets are sold. In addition, a large portion of the prize money is paid out in lump sums that are rapidly eroded by taxes and inflation.