The Growing Popularity of the Lottery

The lottery has long been a popular form of gambling. Its popularity has largely been driven by state governments’ need to raise money for public goods and services. Historically, lotteries have been promoted as a painless source of revenue because they allow the government to spend money without raising taxes. Lotteries have also been promoted as a way to “benefit the public” through prizes that benefit a specific public good, such as education. These arguments have been effective in times of fiscal stress because they can defuse concerns about a tax increase or cuts in public spending. However, as Cohen argues, they are less effective in periods of relative economic stability.

Moreover, many people buy lottery tickets because they enjoy the entertainment value of playing the game. For these individuals, the disutility of a monetary loss can be more than offset by a non-monetary gain, such as a chance to win millions of dollars. Lotteries are also a low-risk investment, in that the cost of a ticket is relatively small compared to the potential prize. As a result, lottery players contribute billions to government receipts that could have gone toward retirement or college tuition.

For the last several decades, however, lotteries’ popularity has coincided with a decline in Americans’ financial security. In the nineteen-seventies and eighties, wages stagnated, health-care costs rose, the wealth gap widened, and our national promise that hard work and education would lead to upward mobility ceased to hold true for most families. This deterioration has made it difficult for voters to embrace taxes and spending cuts.

In this environment, the advocates of lotteries have shifted their strategies. Rather than insisting that they could float all of a state’s budget, they now argued that lottery revenues would be enough to fund one line item—invariably education, but sometimes other services like parks or elder care. They marketed this approach as a comparatively painless alternative to a tax hike or service cut, and it has worked well enough that, as Cohen demonstrates, most states now have a lottery.

While Cohen does not mention it, one other factor in the lottery’s success is that its revenue growth has been fueled by a series of innovations. The first, and perhaps most important, has been the introduction of scratch-off tickets that offer smaller prizes but still provide high odds of winning. In this way, the lottery has become a bit of a product machine, with state governments continually introducing new products in order to maintain or increase revenues. In the process, it has transformed the way people think about gambling.