Lottery is the most popular form of gambling in the United States. People spend upward of $100 billion on tickets every year, bringing in a significant amount of revenue for state governments. State governments promote lotteries as a way to increase revenue without raising taxes or cutting public services. But just how meaningful that additional revenue is, and what the trade-offs are to people who lose money on tickets, warrants scrutiny.
The principal argument used to support state lotteries has focused on the value of lottery revenue as a source of “painless” revenues — generated by players voluntarily spending their money. But as the experience of some states suggests, lottery proceeds aren’t always a reliable substitute for general tax revenues when it comes to funding programs like education or infrastructure.
In those cases, lottery revenues can simply be used to plug holes elsewhere in the state budget, leaving the targeted program no better off than if the general fund had been cut instead. And in other cases, the funds are diverted to other projects that would not have been funded otherwise.
Lotteries do raise money for certain purposes, but critics say they have a regressive impact, with the burden falling disproportionately on the poorest third of households. And although officials often tout the benefits of lottery revenues to boost education budgets, research shows that educational outcomes are no better after state lotteries are introduced than before. Moreover, studies suggest that the revenue lottery officials claim to channel into education may be going to other programs, such as pensions.