The Lottery As a Source of State Funding


In the United States, where lotteries have been in operation since 1964, they’ve become a popular source of funding for state government services—most commonly education, but also elder care, public parks and aid to veterans. Though critics have long derided the lottery as a regressive form of taxation, it remains popular with voters and has become a vital source of income for state governments.

Despite the broad scope of his book, Cohen focuses on the lottery’s modern incarnation, which began in the nineteen-sixties as growing awareness of the money to be made in gambling collided with a crisis in state funding. Under pressure from a growing population, rising inflation and the costs of the Vietnam War, many states found it impossible to balance their budgets without raising taxes or cutting services, both of which were deeply unpopular with voters.

Lotteries have been around for centuries, with early examples including the biblical commandment to draw lots for inheritance and the practice of emperors to give away land or slaves. They were brought to America by British colonists, with the first U.S. state lottery originating in Virginia in 1612. The American reaction was mostly negative, with ten states banning lotteries between 1844 and 1859.

Today, the majority of lottery revenues are generated by scratch tickets. These cost just a couple of bucks and offer players the chance to fantasize about winning a fortune at a small price. But it’s not all fun and games: studies have shown that the poor participate in lotteries at disproportionately lower rates than do people from middle-class and high-income neighborhoods. This has fueled critics’ claims that the lottery is nothing more than a hidden tax on those who can least afford it.

While the popularity of lotteries has varied over time, in almost all cases the revenue they generate for state government is a key factor in their adoption and retention by states. This is especially true during periods of economic distress, when state governments can point to the lottery as a way to avoid raising taxes or cutting services. Lotteries are also very popular with voters, with about 60% of adults in states that have them reporting playing at least once a year.

Lotteries have a wide variety of specific constituencies, from convenience store owners (the primary retailers for lottery tickets) to the suppliers of state prizes to teachers, who receive a large share of the proceeds. In general, these constituencies tend to be politically powerful, which helps explain why lotteries have been so successful at attracting and retaining state support.