The distribution of property or money by lot is a practice with a long history. The Old Testament includes instructions on how land should be distributed by lot, and the Roman emperors used lotteries to give away slaves, property, and other prizes. In modern times, lottery play is a popular way for people to pass the time, and some states even have public lotteries that raise money for school construction or other projects. While lottery advertising is clearly designed to encourage people to participate, is it in a state’s best interests to promote gambling, which can lead to negative consequences for the poor and problem gamblers?
The earliest recorded lotteries were probably town-sponsored, with prize money in the form of goods or services. These raised money for municipal repairs, town fortifications, and charitable uses. They may have been as early as the 15th century. The first lottery to offer tickets with prize money in the form of money began in Bruges, Belgium, in 1466, and was named after the Dutch word for fate (“lot”). The modern state-run Staatsloterij started in 1726.
Most states have adopted a lottery in response to voter demand for additional sources of revenue. The main argument for a state lottery is that it provides a source of “painless” revenue, since it is the result of voluntarily spending money by players who would otherwise be taxed. Lotteries tend to be more popular during economic stress, but the objective fiscal condition of a state government does not seem to have much influence on whether or when a lottery is adopted.
Once in place, a lottery has to develop broad public support for its operation, which requires extensive advertising. In addition to the general population, lotteries must build a constituency of convenience store operators (whose employees are usually trained to sell tickets); lottery suppliers (heavy contributions to state political campaigns by suppliers are frequently reported); teachers, in states where lottery revenues are earmarked for education; and state legislators.
Despite the fact that most people who play the lottery lose, the games remain attractive to a substantial segment of the population. This is especially true among those who are economically disenfranchised and do not have many other choices for entertainment or recreation. The hope that they will win, however irrational and mathematically impossible it is, gives the tickets a value in their minds that outweighs the cost of the money lost.
Lottery ads often tout the benefits of playing, and the underlying logic is sound. The entertainment or other non-monetary benefits of a ticket purchase can outweigh the marginal disutility of the monetary loss. This is the essence of rational choice theory. But the question is, can this be sustained? And does it conflict with the role of a government in a democracy? In a democratic society, shouldn’t the government be concerned with encouraging people to spend their money wisely, not just on things they want but also on things that will benefit others?