How Much Are We Spending on Lotteries?

Lotteries, government-sponsored games in which people buy tickets with a chance of winning money or goods, are a familiar part of American life. And while they may sound like a fun pastime, they’re also one of the most popular forms of gambling in the world. But what’s really surprising is how much we’re spending on them, and whether those dollars are being put to good use.

In early America, Cohen writes, the lottery seemed “a budgetary miracle—the opportunity for states to make revenue appear seemingly out of thin air.” During this era, state governments “were short on tax money and long on public needs for things such as road building, churches, colleges, hospitals, and civil defense. But they had no appetite for raising taxes.” So lottery advocates argued that a national lottery would bring in hundreds of millions of dollars, and allow them to avoid the unpleasant prospect of taxing their citizens.”

This argument proved successful enough that state lotteries began to proliferate, first in Puerto Rico in 1934, then New Hampshire in 1964. Lotteries have a remarkably consistent effect, he adds: As soon as a state legalizes them, it seems to encourage bordering states to do the same. It’s a pattern that has led to the creation of multi-state games such as Powerball, and is one reason why it’s so hard to stop them once they get started.

As the popularity of lottery gambling grew, advocates of its legalization shifted their sales pitch, and started arguing that the proceeds would cover a specific line item in a state’s budget—most commonly education, but sometimes elder care or public parks or aid for veterans. This strategy was more persuasive than the earlier claims that a lottery would float an entire state’s budget, but it was still misleading.