Lottery Commissions and the Regressivity of Lottery Games


Lottery is a form of gambling in which participants pay for tickets and hope to win prizes. These can be cash or goods. In the United States, most state-run lotteries involve picking numbers or symbols from a group of choices. Prizes are then awarded to those who match them in a drawing. Some of the money collected from the ticket sales goes to paying expenses and promoting the lottery, while a percentage is kept as profit or revenues for the organizer or sponsor. People have long been drawn to lotteries. Early American colonies held them to raise funds for everything from public works to military equipment. Benjamin Franklin sponsored a lottery to buy cannons for Philadelphia’s defense, and Thomas Jefferson once managed a private one to ease his debts. Lotteries were even entangled with slavery: George Washington once managed a Virginia lottery that gave away land and slaves, and Denmark Vesey bought his freedom in a South Carolina lottery before going on to foment a slave rebellion.

In the years since 1964, however, when New Hampshire became the first state to legalize the lottery, attitudes toward it have shifted dramatically. It is now considered to be a “popular, low-cost alternative to taxation” that can help governments fund everything from education to social services. Almost all states now have them, with the prizes ranging from cars to homes and vacations. And many more Americans play them than ever before. Some estimates say as many as 50 percent of adults buy a lottery ticket each year.

Yet the lottery is also a very regressive form of gambling. The bulk of sales come from scratch-off games, which are most popular with poorer players. The more popular daily numbers games are less regressive, but they still tend to attract upper-middle-class players who can afford the tickets.

It is not clear whether this regressivity matters to voters, but it is clearly important to lottery commissions. They rely on two messages primarily. The first is that playing the lottery is fun. This message obscures its regressivity and encourages people to take the game lightly. The second is the claim that a lottery is a painless source of revenue. This claim obscures its regressivity and promotes the idea that lotteries are a way for the government to get revenue without raising taxes.

In a political culture defined by an aversion to higher taxes, these arguments have been very persuasive. As a result, more and more states have turned to the lottery as their budgetary silver bullet. They legislate a state monopoly; establish a public corporation or agency to run the lottery; begin operations with a modest number of relatively simple games; and then, under pressure from a constant stream of demand for additional revenue, gradually expand its size and complexity. In the process, they have moved from arguing that the lottery would float the entire budget to insisting that it would fund a specific line item—usually education but sometimes elder care, public parks, or veterans’ assistance.