Public Policy and the Lottery

A lottery is a game of chance in which participants pay to have numbers or symbols randomized by machines and then win prizes if enough of those symbols match. Lotteries are a popular way to raise money for a wide range of purposes, from the construction of public buildings to medical research. But they also provide an object lesson in what can go wrong with public policy when it is left to private interests.

The most famous case of this went very badly indeed: in the United States, the lottery became deeply entangled with slavery. George Washington managed a lottery that included slaves as prizes, and a winning ticket helped free a former enslaved man named Denmark Vesey, who in turn went on to foment a slave rebellion. Despite this, for many years after the American Revolution, lotteries continued to be a common part of life in America.

In Europe, they had a similarly troubled history. In the early fourteenth century, people flocked to lotteries in the Low Countries and elsewhere, betting on items of unequal value. Prizes typically included town fortifications, fine dinnerware, and even slaves. But the popularity of these games grew as the economic fortunes of working people deteriorated. The income gap widened, pensions and job security disappeared, health-care costs rose, and the long-standing national promise that hard work and education would make them better off than their parents ceased to be true.

State lotteries, then and now, are designed to keep players coming back for more. They do so by making the jackpots seem newsworthy, increasing the odds of winning, and introducing new games. It is a classic strategy that is not dissimilar from the tactics used by tobacco companies or video-game makers, but it is carried out under the auspices of state governments.

Lottery commissions are not above playing off of the psychology of addiction either, with everything from ad campaigns to the math behind the games being designed to keep people hooked. They have also learned how to elicit a sense of obligation by promoting the idea that lotteries are good for states, and by relying on the assumption that playing is a civic duty.

This message is a subtle one, but it works. It obscures the regressivity of the lottery and lulls some players into the delusion that they are not gambling. It also encourages people to buy tickets with the naive belief that if they do not win, somebody else will.

The result is that revenue growth for state lotteries often slows or even declines. This has led to a proliferation of “instant games” and other innovations designed to maintain interest and revenues. It has also prompted lotteries to offer prizes that are harder to sell, such as units in a subsidized housing complex or kindergarten placements at an upscale public school. The result is that lottery revenue has become increasingly regressive, and the pitfalls of this approach should be studied closely.