The Hidden Effects of Lottery Commissions

Throughout history, the casting of lots for decisions and determining fates has had a long tradition. It was used in biblical times to distribute land and slaves; it was a method of choosing military officers in the 17th century; and in modern times, it’s been employed to raise money for everything from highway projects to the building of Harvard. But today, lotteries are criticized for promoting gambling behavior and as a major regressive tax on lower-income communities.

Despite their obvious shortcomings, states continue to promote and run lotteries. In fact, lottery sales make up a significant part of many states’ budgets. But the way in which they do so obscures their true impact. For starters, state commissions present the lottery as fun, which has the effect of hiding how much people actually play. It also promotes the false message that all people play, which conceals how disproportionately lower-income people play.

One reason state governments are so enthusiastic about lotteries is that they’re a relatively easy source of revenue. Unlike taxes, lotteries don’t require the participation of a large proportion of the population in order to be effective. Instead, they draw on a core group of players: men, women, blacks and Hispanics, those with less education and, to a lesser extent, whites. These groups are disproportionately represented in the overall player pool, and they tend to spend more on tickets than other types of gamblers do.

These skews have profound implications for the social welfare of the people who play. The fact that so many low-income people are attracted to lottery games makes them a particularly important source of addiction and gambling behavior. In addition, they create a class of citizens who can’t afford to gamble responsibly and rely on the lottery as a form of income replacement, putting them at greater risk for financial problems and other negative outcomes.

Lottery commissions have tried to mitigate these effects by changing the messaging around the lottery, but they haven’t succeeded in eliminating the negative consequences. Instead, they’ve created a double standard: It’s fine for wealthy people to play because they can afford to, but it’s wrong for poor people to do so because it will hurt them. And that’s a very dangerous message to send.

What’s more, the state’s reliance on lotteries as a primary source of revenue is deeply troubling. In enacting lotteries, governments are assuming that gambling is inevitable, that people will always want to try their luck, and that the government might as well encourage it by offering its own games. But by doing so, states are creating more and more gamblers. Moreover, they’re ignoring the social costs of this activity, which are more than just the loss of tax revenues. The real issue is not that governments need lotteries, but how they manage them when they do have them. Ultimately, these practices are harmful to the public interest.