Lottery Revenue – Is it Right For Your State?


The lottery is an ancient form of gambling, but it has become a very popular way for governments to raise money. The basic elements are simple: bettors write their names, amounts staked and numbers or symbols on paper that will be shuffled and selected in a drawing to determine the winners. There are many variations on this theme, but most involve some kind of recording and verification to ensure that the selections are blind, fair and random.

The principal argument for adopting lotteries has been that they are a painless source of revenue: voters voluntarily spend their money on tickets, while politicians view them as a way to collect taxes without raising or cutting general-purpose funding. This logic has been successful in gaining and maintaining public approval. Moreover, the popularity of lotteries has not been tied to states’ actual fiscal conditions: state legislatures have approved them in times of economic stress and when state government finances are in good shape.

However, it is not clear whether the benefits outweigh the costs. The biggest problem is that lottery revenues are volatile, and a substantial portion of their growth stems from the publicity generated by a large jackpot. The result is that the games must be constantly expanded with new games to maintain and even increase revenues. The resulting competition with other forms of gambling, particularly online and video games, can be problematic for states trying to balance their lottery operations with other policy goals.