The Economic Impact of Lottery Games


A lottery is a form of gambling where people buy tickets to have a chance at winning a prize, usually a large sum of money. People may play for entertainment value or non-monetary reasons, such as the desire to become rich, but it’s important to note that there are also a number of economic issues associated with playing lotteries, including how they impact consumer behavior and state revenue.

For states facing budgetary crises and an anti-tax electorate, lotteries offered a way to maintain services without raising taxes, Cohen writes. They were “budgetary miracles.” And since politicians are always looking for ways to avoid being punished at the polls, a lotteries became an appealing option for them.

Early America was no exception: Thomas Jefferson managed a lottery, and the Continental Congress used one to finance the Revolutionary War. But despite their popularity, lotteries had a dark side as well, tangled up with the slave trade and, in at least one case, allowing a formerly enslaved person to win a lottery and purchase his freedom.

But as the popularity of lotteries grew, advocates began to shift their messaging. Instead of arguing that the games would float most or even all of a state’s budget, they began to claim that they could cover a single line item—invariably some government service that was popular and nonpartisan, such as education, elder care, or public parks. This approach made it easy for legislators to get behind a lottery: It was not, they could argue, a vote for gambling but a vote to support veterans or education.