The idea of casting lots to make decisions has a long history in human culture (Nero was a fan), and the practice of selling tickets for the chance to win money dates at least to the earliest days of recorded civilization. Lotteries are often portrayed as a good thing, and indeed they raise substantial funds for state governments that can be used for a wide range of purposes. But, as a recent article by Mark A. Clotfelter and James Cook points out, that message is based on a fundamental misreading of the way lottery proceeds are actually used by state governments.
In a typical lottery, participants buy tickets for a chance to win a small sum of money. The ticket prices vary, but in general they reflect the expected utility a player receives from playing. For most players, the entertainment value of the game and the chance to acquire wealth outweighs the negative utility of losing. Thus, buying a ticket is a rational decision for them.
Lotteries have become a major source of state revenues, but the fact is that these dollars are not being spent on educating children or repairing roads, or even paying down deficits. Instead, they are largely being diverted to fund political programs, particularly those that promote the lottery’s image as a “painless” source of state revenue. The argument is that, if everyone wins a little bit of cash, the winnings are not taxed very heavily, so the overall impact on state finances will be minimal.
This is an extremely misleading argument, and it reflects the way that politics works in America today. The political establishment and the media focus on the specifics of lottery operations, such as how much people are winning and when they buy their tickets, while ignoring the underlying dynamics that drive them.
As the writer Shirley Jackson reveals in her short story The Lottery, which takes place in a rural American town, the arrangements for the lottery begin with a gathering of families, each of whom plans to draw a slip from a box. One of the slips is marked, and when Bill Summers’s wife Tessie draws that ticket, she cries out in anguish.
Cohen explains that the modern lottery’s origins are a classic case of public policy being made piecemeal, without any sort of broad oversight. Consequently, many states end up with gambling industries whose policies and revenue streams they can do very little to shape. This dynamic is also at play in the rapid evolution of sports betting, which will soon be legalized across most of the country. As the debates over sports betting turn more ferocious, politicians and media figures will be forced to confront the realities of how these new gambling venues are shaping state government. That will likely have profound implications for the ways in which American society is governed and the nature of our democratic system. That is a debate we can’t afford to delay any longer.