The casting of lots to make decisions and determine fates has a long record in human history, including several instances in the Bible. However, lotteries have a shorter history as a means of raising money for material gain. The first recorded public lottery to distribute prize money was held during the reign of Augustus Caesar for municipal repairs in Rome. Private lotteries were also popular in Europe, notably for the purpose of selling products or properties. In America, colonial lotteries played a major role in financing both private and public ventures. They financed the construction of Harvard, Dartmouth, Yale, King’s College (now Columbia), Princeton, and the University of Pennsylvania as well as roads, canals, churches, and libraries. They also helped to finance the Continental Army at the outset of the Revolutionary War.
Today, state lotteries are widely accepted and play a significant role in the economy. Almost 50 percent of American adults purchase lottery tickets. The majority of players play the Powerball and Mega Millions games. A smaller percentage participate in the state lotteries that offer smaller prizes.
The promotion of the lottery is done through television, radio and Internet advertising. In addition, lotteries have extensive social media campaigns to reach their target audience. The message of the advertisements is that everybody should be willing to hazard a small sum for a large prize. This message is based on the assumption that people’s utility for the money they spend to play the lottery outweighs the disutility of losing it. The lottery is not a perfect system for raising funds because the cost of running the game can outweigh its benefits, and there are many potential problems that might arise from its operation.
While there are some concerns about compulsive gambling and its impact on lower-income groups, state lotteries continue to enjoy broad public support. Since New Hampshire initiated the modern era of state lotteries in 1964, no state has abolished its lottery. But as lottery revenues have grown, the debate has shifted from the general desirability of the game to questions about its specific features and operations.
A central theme of the discussion has been whether or not lottery advertising is deceptive, frequently presenting misleading odds for winning the jackpot and inflating its value (lottery prize payments are usually paid in equal annual installments over 20 years, which can dramatically erode the value after taxes and inflation). Another question that has emerged is whether the state should be in the business of promoting gambling.
The reason for the proliferation of state lotteries has been that states need additional revenue sources and voters are willing to pay a small price in exchange for greater access to services such as education and police protection. The lottery is an alternative to onerous taxation, but critics charge that the state’s focus on maximizing revenues creates problems such as unfairly targeting low-income people and encouraging problem gamblers. The debate over the lottery will continue to revolve around the appropriate balance between raising taxes and promoting a form of gambling.
