The idea of dividing property or wealth by drawing lots has a long record in human history, including several instances in the Bible. But modern lotteries—public and private—are designed to make money from the public, and that has raised concerns about their ethics and their role in society.
Lotteries are government-sponsored games of chance that award prizes, usually cash or goods, to players whose numbers match those drawn. The prizes can be anything from a few dollars to a large sum of money. Most state governments operate a lottery, although some do not.
When state governments adopt a lottery, they typically must win both the legislature and the public’s approval. A lottery’s popularity tends to increase in times of economic stress, when the prospect of tax increases or cutbacks in public services may be on the horizon. But this increase is not necessarily tied to a state’s actual fiscal health, as Clotfelter and Cook point out.
Historically, lottery proceeds have been used for a variety of purposes. During the early post-World War II period, lottery revenues were seen as a way to fund social safety net programs without especially onerous taxes on the middle and working classes. This arrangement proved to be unsustainable, however, and in the decades since then, lottery profits have increasingly been used for general state funding rather than social safety net programs.
Traditionally, a lottery has consisted of purchasing tickets for a drawing at some future date—usually weeks or months away. But in the 1970s, innovations introduced a new kind of lottery: Instant games, which involve buying tickets for prizes that are immediately awarded. These new types of games quickly became the dominant form of lottery.