What is a Lottery?

A lottery is a process of allocating prizes by chance, involving the drawing of numbers for each prize. It can be used to award anything, from money to units in a housing complex to kindergarten placements. Traditionally, state governments have operated lotteries as a form of taxation to raise money for public purposes. Since the early 20th century, however, many states have expanded their lotteries into new forms such as keno and video poker in order to boost sales. Despite these expansions, the basic structure of a lottery remains the same: a state passes legislation to create one; establishes a state agency or public corporation to run it (instead of licensing private firms in exchange for a share of the profits); begins operations with a modest number of relatively simple games; and, due to continued pressure to increase revenue, progressively expands its offerings.

The most common type of lottery is a financial lottery, wherein people purchase tickets in exchange for the opportunity to win a cash prize. This form of the lottery has the distinction of being a legal activity in most jurisdictions, and it is also very popular. A surprisingly large percentage of people, about 2 percent of the world’s population, participate in some form of financial lottery, whether it be purchasing tickets for the Powerball or Mega Millions or putting a dollar in a vending machine to try and win a candy bar.

Most state-run lotteries are not very transparent about their business practices, and they tend to rely on two messages in particular when trying to market themselves. The first is that playing the lottery is fun, that the experience of scratching a ticket is enjoyable and worthwhile in itself. Coded in this message is the idea that lottery play is not serious gambling, that people should take it lightly, which obscures the regressivity of lottery revenues and obscures how much some people will spend on tickets.

The second message that is heavily promoted is the fact that lottery players are doing a public service by raising money for their state governments. This is a false message that plays into the myth of public goods and falsely portrays lottery revenues as an innocent form of taxation. It ignores the reality that state lotteries are regressive, that low-income people play at higher rates than wealthy people do, and that overall lottery revenues are a tiny fraction of total state tax revenues. It also completely overlooks the fact that lottery play is largely a discretionary activity, and that the vast majority of people who play the lottery spend very little of their income on it. It is a misleading message that plays into the irrational beliefs of many people who believe that they are doing their civic duty by buying lottery tickets.