A lottery is an arrangement in which a group of people purchases tickets for the chance to win a prize. The winners are selected by a process that relies on chance, and the prizes can be either money or goods. Prizes are generally awarded in lump sums, but the winning tickets may also be paid in instalments. Many lotteries are state run, while others are privately owned. In the United States, state-run lotteries account for over 70 percent of total national ticket sales. Most of the remainder are private, such as the Powerball and Mega Millions. The popularity of the lottery has a long history. In the fourteenth century, it was common in the Netherlands to organize lotteries to raise funds for town fortifications. In the seventeenth century, they became a popular way to provide public services, and in the eighteenth century, it was common for the state governments to hold them, claiming that they were “budgetary miracles” because they brought in large amounts of money without having to impose taxes or cut public spending.
Cohen believes that the modern popularity of lotteries was caused by two factors. First, they took advantage of the innate human tendency to gamble. Second, they capitalized on a crisis in state funding. In the nineteen-sixties, the costs of a growing population, inflation, and wars began to put enormous pressure on state budgets. It was hard to maintain existing services, even for affluent states. And balancing the budget required either raising taxes or cutting public spending, which were both deeply unpopular with voters.
To keep up with the costs, states needed to increase their tax revenue, and lotteries were a perfect solution. They weren’t just gambling, but a type of “government-sponsored gambling” that offered a much smaller risk to the participants than other forms of gambling. And because lotteries weren’t regulated by the government, they could charge higher fees than other types of gambling, and they didn’t have to worry about the ethical objections that might otherwise be raised against them.
For affluent whites, the lottery was also an attractive alternative to higher taxes, as it promised them the chance to become rich by the stroke of a pen. Moreover, they didn’t have to worry about paying for the programs that might benefit blacks, who would be disproportionately affected by any tax increases.
But, as Cohen points out, this argument had some serious flaws. For one, it ignored that the influx of lottery profits did nothing to reduce poverty or social mobility. Moreover, it neglected the fact that the majority of lottery players are low-income, less educated, and nonwhite. And it didn’t take into account the huge costs that states pay to operate and advertise their lotteries. In addition, most of the money that’s won by lottery players is spent on buying tickets. The rest of it goes to administrative costs, marketing, and advertising. Consequently, most of the proceeds do not go to fund the desired public services.