The Lottery Industry

Lottery is a form of gambling in which people purchase tickets for a drawing to win a prize. The casting of lots has a long history, but the use of lotteries for material gain is rather more recent. The first recorded public lotteries in the 15th century were held to raise funds for town fortifications and to help the poor.

In the United States, state governments have introduced lotteries to augment their revenue streams. In the immediate post-World War II period, many legislators promoted lotteries as a way of funding social welfare programs without raising onerous taxes on middle-class and working-class taxpayers.

The introduction of a lottery has followed similar patterns in virtually every state: the legislature legislates a monopoly for itself; establishes a state agency or public corporation to run it (as opposed to licensing a private firm in return for a percentage of its profits); starts operations with a modest number of relatively simple games; and, due to pressure to generate additional revenues, progressively expands the lottery in size and complexity.

The resulting industry is plagued with abuses, which have strengthened the arguments of those opposed to lotteries and weakened their defenders. The fact that most of the players and revenues come from middle-income neighborhoods — with far fewer proportionally from high-income or low-income areas — also fuels criticisms of a regressive impact on lower-income groups. A large share of the winners are likely to spend their prizes on luxuries that will quickly deplete their wealth, and they may wind up bankrupt within a few years.