Lottery is a form of gambling in which people have a small chance of winning a large amount of money. It has a long history, beginning with the casting of lots in the Old Testament and later by Roman emperors to give away property and slaves. The modern state-sponsored lottery was introduced to the United States in the nineteenth century. Since then it has grown to a multibillion-dollar industry and spawned a variety of controversies. The debate over whether or not to adopt a lottery is usually driven by concerns about its potential negative social consequences—in particular, its effects on poor people and problem gamblers. But a second, equally important question is raised: Does running a lottery properly serve the public interest?
The answer to this question depends on how a lottery is run. If it is run as a business, the main concern is maximizing revenues. This requires a large investment in advertising and promoting the lottery to potential customers. While some research supports the conclusion that this strategy is effective, it also raises ethical questions. Many states, for example, use aggressive marketing tactics to lure new players, including radio and television commercials, free tickets and other promotional giveaways. This is a clear conflict of interest.
If a lottery is run as a public service, on the other hand, the primary objective is to provide entertainment and other non-monetary benefits to its customers. While the benefits of playing a lottery are considerable, it is important to remember that its purchase price is not zero. In fact, for many people it will represent a substantial disutility. For instance, a person who spends a dollar or two on a ticket could miss out on other possible ways to enjoy that same dollar or more—including saving for retirement or paying college tuition.
While the wealthy do play the lottery, they tend to buy fewer tickets than those with lower incomes. In fact, one study found that individuals with a household income above fifty thousand dollars spent about one percent of their total annual income on lottery tickets; those in the bottom half of the income distribution spent thirteen per cent.
In addition, studies of the lottery have found that the greatest concentrations of lottery outlets are located in low-income neighborhoods. As a result, poorer households tend to gamble more than wealthier ones, even when accounting for differences in income and education.
In the wake of these findings, advocates of state-sponsored lotteries shifted their approach. Instead of arguing that a lottery would float most of a state’s budget, they began to emphasize the benefits to a specific line item—typically, but not always, education. This narrower argument made it much easier to sell a lottery, and it also allowed advocates to avoid the objection that a vote for the lottery was a vote against education. The resulting strategy seems to have been successful, and no state has abolished its lottery in the thirty years since New Hampshire opened the door for the modern era of state-run lotteries.