May 26, 2024

The Lottery As a Business

2 min read

The casting of lots has a long history in human affairs, as attested by the Old Testament and Roman records—Nero liked them, for example—but the lottery’s emergence as a commercial enterprise is fairly recent. Originally, it was simply a party game or a means of divining God’s will; later, it became a popular source of public funds for town improvements and even charitable relief.

A lottery’s success depends on the extent to which the entertainment value (or other non-monetary benefits) of playing exceed the disutility of a monetary loss. If enough people perceive this to be the case, they’ll buy tickets—and that’s why jackpots tend to grow to apparently newsworthy proportions.

Those super-sized prizes also make the lottery more attractive to the media, which gives it a major advantage in terms of advertising dollars. The resulting revenue surge is also one of the reasons state lotteries have broad public support, despite Protestant proscriptions against gambling and even when the states’ objective fiscal circumstances suggest that other ways to raise money would be more effective.

But running a lottery as a business that primarily seeks to maximize revenues creates some problems. Its promotion of gambling necessarily undermines the image of a publicly funded service and can have negative consequences for poor and problem gamblers. In addition, it puts lottery officials at cross-purposes with the general welfare, which could be hurt by a lottery that’s run solely to generate cash. Moreover, the evolution of state lotteries is often piecemeal and incremental, with little or no general overview.

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