Public Services and Lotteries


Lotteries are a common source of funding for governments and public services. They have been around for centuries and are generally regulated by law. They are usually run by a state government, but private entities may also operate them. The prizes for winning are usually large sums of money. In the United States, 44 states and the District of Columbia have lotteries. The six states that don’t are Alabama, Alaska, Hawaii, Mississippi, Utah, and Nevada (home to Las Vegas). The reasons for these absences vary; Alabama and Utah cite religious concerns; Mississippi and Nevada worry that the government gets too big a share of lottery proceeds; and Alaska is flush with oil revenue and lacks the fiscal urgency that might drive other states to adopt a lottery.

A key element of a lottery is a pooling mechanism for all stakes placed in it, or, as the term “lottery” implies, an arrangement for distributing prizes by lot or chance. This pooling may take the form of a collection of tickets or their counterfoils, from which winners are selected by some mechanical means, such as shaking or tossing; computers have become increasingly popular for this purpose. Typically, the tickets or counterfoils are thoroughly mixed before the drawing to ensure that chance and only chance determine the selection of winners.

Once the pool is established, the costs of putting on the lottery and its promotion must be deducted; a percentage normally goes to the organizers as revenues and profits, and the remainder, or prize money, goes to the bettors. Potential bettors are attracted to lotteries that promise large prizes, and the size of these prizes is what drives ticket sales. Some people want to buy a ticket to win a large prize, while others prefer to purchase tickets for smaller prizes that they can easily afford, and still others simply enjoy the experience of playing.

In the early days of the modern lottery, state legislators saw it as a way to provide a number of public services without incurring especially onerous taxes on middle- and working class people, particularly those who are least likely to gamble. But the reality is that lotteries are regressive and draw heavily from poorer populations, minorities, and those with gambling addictions. Studies have shown that the largest lotteries tend to be in states with larger social safety nets and more people whose incomes are derived from wages and salaries rather than from investments or inheritances.

The regressive nature of the lottery has led to a great deal of criticism from economists and social-service providers. Some of this criticism has focused on the high cost to society of the losses to low-income households that result from participation in the lottery. Other criticisms have focused on the social inequality and limited upward mobility that the lottery exacerbates. This has been a factor in many states’ recent decisions to cut back on advertising and promotional activities, and to reduce the size of jackpots.