Lottery is a common activity for many Americans, with individuals spending more than $80 billion on tickets each year. Yet despite the popularity of this form of gambling, little is known about how it actually benefits society, other than as state revenue.
State lotteries are generally promoted as a source of “painless” revenue, with the argument that players voluntarily spend money to benefit public services. But this view of the lottery is flawed, according to Richard Lustig, an economics professor at Northwestern University. He found that lottery revenues do not increase public spending on education, infrastructure, or social safety nets, and the majority of state lottery money is spent on administrative costs.
Using data from the New York state lottery, Lustig and his coauthors found that while ticket sales initially expand dramatically following a lottery’s introduction, they eventually level off or even decline. To maintain or increase revenues, state lotteries must continually introduce new games. This has been especially true since the 1970s, when instant games – in which the prize amounts are less than those of traditional lotteries but the winnings are immediately available – became popular.
While the casting of lots to make decisions and determine fates has a long history in human societies, the use of the lottery for material gain is much more recent, as documented by town records in the Low Countries in the 15th century for funding town fortifications and helping the poor. These early lottery records show that people bought tickets with varying amounts of money in return for the chance to win prizes such as meat, grain, or clothing.
