How the Lottery Helps States Balance Their Budgets


A lottery is a game in which people buy tickets and hope to win a prize. The prize can be money, goods or services. People have been using lotteries since ancient times. The practice is also known as a “drawing of lots”. The drawing of lots to determine ownership or other rights is recorded in many ancient documents. In modern times, states and private organizations use lotteries to raise funds for schools, towns, wars, and public works projects. Some states even have state-owned lotteries.

State lotteries have broad and enduring popular support, though that support is not universal. Lotteries attract many different types of players, with men being more likely to play than women; whites, blacks and Hispanics playing at varying rates; the young and the old tending to play less often than the middle age range; and the wealthy more than the poor. The lottery is an excellent source of revenues for state governments, but it does not provide enough revenue to fund all state expenditures.

During the nineteen-sixties, as the cost of welfare and social services rose and the economy suffered from the effects of inflation and the Vietnam War, states began to struggle to balance their budgets. Many were facing a double crisis: they had to raise taxes and reduce services, both of which would be unpopular with voters. Lotteries offered the state a way to increase revenue without raising taxes, and it was quickly accepted as an effective tool for solving budgetary problems.

New Hampshire launched the first state lottery of the modern era in 1964, and thirteen more states adopted it within a few years. Cohen writes that America’s obsession with the dream of winning a lottery jackpot coincided with a decline in economic security for most working families. Incomes slipped, job security waned, health care costs rose, and the American dream of a secure retirement and a decent standard of living seemed to be fading.

But while the lottery does bring in some extra revenue for state governments, critics charge that it also promotes addictive gambling behavior and is a major regressive tax on lower-income groups. Moreover, the critics argue, the lottery is often manipulated by advertising and promotional practices.

How the Lottery Helps States Balance Their Budgets
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