The casting of lots to determine decisions and fates has a long history in human culture. In the early days of America, colonial lotteries were used to fund projects from paving streets to building ships. They even helped the Virginia Company establish the first English colonies in North America. Later, they were instrumental in raising money to build colleges like Harvard and Yale. Lotteries also played an important role in financing the Revolutionary War and supplying the Continental Army with ammunition.
Today, lotteries are a common source of state revenue and continue to be very popular with the public. They are marketed to the public as an alternative to traditional taxation that has little or no impact on people’s ability to meet their needs and desires. They are also advertised as a way to improve people’s lives by providing them with the opportunity to win big prizes for relatively small investments of their time and effort.
In the immediate post-World War II period, many states adopted lotteries as a way to finance a growing array of state services without imposing especially onerous taxes on middle and working class citizens. Lotteries were hailed as “painless taxes.” But, as the economy deteriorated in the 1970s and 1980s, it became increasingly difficult for state governments to meet their obligations to the poor, elderly, students, and other citizens. Lottery revenues soared as a result, and some states began to depend on them for a substantial portion of their revenues.
State lotteries typically follow a similar pattern of development: a state legislates a monopoly for itself, usually by creating a public corporation to run the lottery rather than licensing a private firm in return for a percentage of the profits; the new operation begins with a modest number of relatively simple games; and, because of the pressure to maintain and increase revenues, the lottery progressively adds more complex and costly games.
While the public support for state lotteries remains strong, debate and criticism have moved from a general acceptance of them to more specific features of their operations. Criticisms now focus on issues such as the alleged regressive effect on low-income groups and the degree to which the lottery promotes problem gambling.
Because lotteries are primarily advertising businesses, they must maximize their revenue by appealing to the interests of individual consumers. As a result, their promotional campaigns necessarily include messages that encourage gamblers to spend large amounts of their income on the hope of winning. This is at cross-purposes with the state’s broader policy goals, and it raises the question of whether it is appropriate for state governments to be involved in the promotion of gambling.