A competition based on chance in which numbered tickets are sold and prizes (usually money) are awarded to the holders of those numbers. The word lottery derives from the Dutch noun lot meaning “fate”; the casting of lots to determine fate and to distribute property has a long history, including several instances in the Bible. In modern times, lotteries are a popular source of public revenue in many states and are used for a wide variety of purposes, from paving streets to funding university student awards.
When state governments began introducing lotteries in the immediate post-World War II period, they argued that they would provide a new and relatively painless stream of revenue to finance the expansion of state services without raising taxes or cutting other programs. The argument resonated with voters, who viewed the money as being their own voluntarily contributed tax dollars, rather than something taken away from them by force (as in the case of a higher income tax).
State governments quickly learned that the broader appeal of the lottery to general public opinion did not necessarily correspond to its real value to the state government’s fiscal health. Studies have consistently shown that a state’s fiscal position does not appear to have much bearing on the decision to adopt a lottery and, once a lottery is in place, its popularity does not seem to depend on its objective fiscal situation. Instead, the success of a lottery seems to depend largely on how much it is seen as benefiting a particular public good, such as education.
The success of the lottery as a painless source of public revenue has led to the emergence of a large and increasingly sophisticated industry that is remarkably consistent in its structure, organization, and operation. Most states legislate a monopoly for themselves, establish their own state agency to run the lottery, begin operations with a small number of relatively simple games, and, due to continued pressure on revenues, progressively expand the offerings in terms of both the types of games and the prize money offered.
In this way, lottery systems are structured to encourage a certain amount of play – even among those who do not have a high level of economic security. This, in turn, creates a large group of specific constituencies for the lottery: convenience stores, which sell the tickets; suppliers of prizes (heavy contributions to state political campaigns by these providers are common); teachers, for whom the proceeds are often earmarked; and so on.
All of which leads to a second problem with the lottery: as it expands, lottery officials are faced with a challenge in balancing the interests of these various groups. This is exacerbated by the fact that lottery policy is often made at the local level, with little centralized control and oversight. This can lead to inconsistencies in the way that prizes are awarded, which can produce unintended consequences for some groups. It can also give rise to criticisms of lottery advertising, which is commonly accused of presenting misleading information about the odds of winning the jackpot (as well as inflating the actual value of the money won, given that the amounts are usually paid in annual installments over 20 years and inflation dramatically reduces their current value).