A lottery is a gambling arrangement in which prizes are allocated by chance. People have been playing lotteries for centuries. They were common in the Roman Empire-Nero was a fan-and they are found throughout the Bible. The casting of lots is used for everything from choosing kings to determining who gets Jesus’ clothes after his Crucifixion. In modern times, state governments have established their own versions of the lottery to raise money for a variety of public purposes. Lotteries, as Cohen writes, became a sort of “budgetary miracle:” the chance for states to make revenue appear seemingly out of thin air without having to resort to raising taxes.
When state officials started lotteries in the nineteenth and twentieth centuries, they were often responding to a particular need. They viewed them, as did many voters, as a way to maintain services without the need for an increase in taxes. In the late twentieth century, as the nation’s aversion to taxation deepened, lotteries were particularly appealing to politicians because they could raise large sums of money with little risk.
Once a lottery has been established, debate and criticism tend to focus on specific features of its operations, such as its impact on compulsive gamblers or its alleged regressive effects on lower-income communities. In addition to such concerns, however, there are also more general political considerations. State governments have a natural tendency to become dependent on “painless” lottery revenues, and there is pressure to increase the amount of money that the industry brings in.
Various studies show that low-income citizens play the lottery in greater numbers than other groups, but the reasons for this are complex and rooted in a number of psychological factors. As one study in the Journal of Behavioral Decision Making notes, it would be naive to think that these individuals are simply ignorant or making cognitive errors when they purchase lottery tickets. More likely, a more fundamental reason for the disparate participation is that lotteries represent a unique opportunity to invest low amounts of money in the chance of receiving a large return on investment.
Lotteries are a form of low-risk investing that can result in enormous gains, and many people find the risk-to-reward ratio extremely appealing. But the fact remains that purchasing a lottery ticket represents foregone savings that could be invested in more productive ways, such as retirement accounts or college tuitions. And, as a recent study in the Journal of Applied Psychology shows, there is a strong correlation between lottery play and a host of negative consequences, including substance abuse, domestic violence, and poor school performance. Ultimately, the regressive nature of lottery funds can be traced to a profound misunderstanding of how gambling works. The earliest state-sponsored lotteries date back to the early seventeenth century in the Dutch cities. The word itself, as the Oxford English Dictionary points out, is probably derived from Middle Dutch loterie, a combination of the verb “lot” (fate) and the noun “erie” (“deal”). The game eventually spread across Europe, gaining in popularity in a period when many states were struggling to maintain existing services while confronting an aversion to taxation.