What is the Lottery?

A competition based on chance, in which numbered tickets are sold and prizes are given to the holders of some or all of the numbers drawn at random; commonly a game for raising funds for public charitable purposes. Historically, the term has also referred to a system of allocating goods or services or to settle disputes by casting lots.

The lottery draws on a fundamental human impulse: people like to gamble. Super-sized jackpots, particularly those that become newsworthy by hitting astronomical sums, drive lottery sales, and the big prize amounts get free publicity on TV and online.

But there’s much more going on in the modern lottery: the game has become an industry, and the people involved in it have a lot of money to make. They have also figured out how to dangle instant riches in front of the masses, a strategy that has proven highly effective at driving ticket sales and generating revenue for state coffers.

Since New Hampshire introduced the first state lottery in 1964, nearly every other state has followed suit, and, remarkably, no state lottery has ever been abolished. And while critics have been quick to point out the blatant self-interest and crony capitalism inherent in lottery operations, there is no denying that the games are a significant source of “painless” revenue for state governments.

In fact, it is now commonplace to find state lottery games in convenience stores; in the hands of teachers (in those states that earmark lottery revenues for education); and in the pockets of lottery suppliers, who frequently contribute heavily to political campaigns. Lotteries also have a special appeal for state legislators, who view them as a way to raise revenue without a direct tax on the general public.

But why does the lottery continue to draw so many players, even those who might otherwise be skeptical of gambling? One argument focuses on the notion that people buy tickets because the disutility of losing money is outweighed by the utility of winning. This is a valid point, but it ignores the many ways in which people can gain satisfaction from non-monetary forms of entertainment, and the relative disutility of losing money.

A more persuasive argument is that lotteries are an effective means of raising money for public purposes, and the evidence supporting this assertion is compelling. The lottery has raised billions of dollars for such diverse projects as building the British Museum, repairing bridges, constructing the Statue of Liberty, and rebuilding Faneuil Hall in Boston.

Although there are many different types of lotteries, all operate in similar fashions: the government establishes a legal monopoly; hires or contracts a private company to run the lottery; begins operation with a modest number of relatively simple games; and, due to constant pressure for additional revenues, progressively expands the game in size and complexity, particularly through the introduction of new games. The expansions have been driven by both state legislatures and the public, which consistently approve state lotteries in a variety of referendums.