The Popularity of the Lottery
Throughout history, states have subsidized various activities through gambling, but the modern lottery revival began in 1964 when New Hampshire established a state lottery. Since then, 37 states and the District of Columbia operate lotteries.
Unlike most forms of government revenue, the profits from lottery games are generally free from direct political influence. Consequently, the popularity of the lottery does not depend much on the objective fiscal conditions of state governments: Lotteries gain broad support even in times of economic stress when other potential sources of revenue may be harder to sell.
Lottery advertising often plays on the public’s ignorance by presenting misleading information about odds of winning and by exaggerating the value of the prizes (lotto jackpots are typically paid in installments over a period of time, and inflation dramatically erodes the present value). In addition, critics charge that the profits from lottery games are diverted from other public needs.
Lottery supporters argue that the proceeds are used to benefit a particular public good, such as education. However, the evidence suggests that, at best, lotteries may only offset the costs of one or more existing state services. At worst, they may encourage addictive behavior, impose a significant regressive tax on low-income groups, and reduce educational efficiency.