A system in which numbers are drawn for prizes. Lotteries are popular and widespread, raising billions of dollars in revenue each year. Although critics claim that they promote addictive gambling behavior and act as a major regressive tax on lower-income groups, few state governments have abolished them.
The term is derived from the Dutch word for fate, and it became the name of an activity that was once popular in Europe: a public competition in which numbers were drawn for the award of money or goods. Lottery games were used in the 17th and 18th centuries to provide funds for a variety of public uses, including charitable activities. The first modern state lottery was established in New Hampshire in 1964, and has since grown to include 37 states.
People who buy a ticket and then wait for a drawing to determine whether they have won may feel they are in control of their own destiny, but probability laws make it clear that winning the lottery is a matter of luck. The odds of winning a prize can vary wildly, depending on the amount of money being offered and how many tickets are sold. People who purchase tickets more frequently or bet larger amounts have lower chances of winning.
Several types of lotteries exist, but the most popular is the state-sponsored variety, in which the proceeds are used for a number of public purposes, including education. The popularity of lotteries has given rise to other forms of public choice, in which the government awards a limited number of goods or services (such as units in a subsidized housing block or kindergarten placements) to paying participants by chance.
Lotteries are widely accepted by Americans, but they have a long and sometimes rocky history. In fact, they were once considered a sin against God and the doorway to even worse vices. But the same religious and moral sensibilities that drove prohibition to the forefront of public opinion began to turn against gambling in general during the 1800s. Denmark Vesey, an enslaved person in Charleston, South Carolina, won a local lottery, and used the winnings to attempt to buy his freedom.
In the United States, public officials usually legislate a lottery by creating a state agency or corporation to run it (as opposed to licensing private firms in exchange for a share of profits). Once a lottery is established, its revenues quickly expand, but eventually begin to level off and even decline. This leads to a constant pressure for additional revenues, which is often met by the introduction of new games. Consequently, few, if any, state lotteries have any coherent “gambling policy.” In most cases, it is the politicians and public that inherit a policy and a dependency on revenues they can do little to change. This is a classic case of public policy being made piecemeal and incrementally, with the public welfare rarely taken into consideration. This is a recipe for abuses, which will be discussed in detail below.