Is Running a Lottery an Appropriate Function for a Government?


Lottery is a game where players pay for tickets and have the chance to win money, goods, or services by selecting a group of numbers that are randomly spit out by machines. People buy tickets in the hope that they will hit the jackpot, which is usually a large sum of money. The idea behind this game is that the disutility of losing is outweighed by the expected utility (a combination of entertainment value and monetary gain) of winning, and thus it is a rational choice for individual participants.

While the practice of making decisions and determining fates by casting lots has a long record in human history, the modern lottery is a much more recent development. The first public lotteries, with prizes in the form of cash, appear to have been held in the 15th century in the Low Countries as a way to raise funds for town fortifications and to help the poor.

Modern state lotteries are operated as a business, with the goal of maximizing revenue. Because of this, they promote the lottery by advertising to persuade potential customers to spend their money on tickets. This strategy has the unintended consequence of promoting gambling among those who are not likely to be rational in spending their money. It can also lead to problems such as poverty and problem gambling. Is running a business that is at cross-purposes with the larger public interest an appropriate function for a government?

Many people play the lottery because they think that their odds are long and that there is a sliver of hope that they will win. They may follow all kinds of quote-unquote systems that are not based on sound statistical reasoning, such as buying tickets only from certain stores or selecting numbers that have already appeared in previous drawings. They may also try to avoid choosing a number that starts with the same letter as their name or the last digit of their age.

A big part of the appeal of a lottery is that it provides a large prize in exchange for relatively low taxes, and this has made it a popular source of revenue for governments at all levels. The lottery’s popularity has increased in times of economic stress, when people are fearful of taxes rising or other cuts in social safety net programs. But it has also gained popularity at other times, when the objective fiscal condition of a state’s government is not particularly dire.

One reason for this trend is that the growth of state lotteries has stalled in recent years, and government officials are under pressure to find new ways to increase revenues. This has led to the expansion of new games, such as keno, and to more aggressive promotion, including through advertising. The growth in ticket sales has been driven largely by super-sized jackpots, which can generate enormous publicity for the lottery and boost its popularity. Nevertheless, the chances of winning are still very small.