How Much Revenue Does the Lottery Generate For State Budgets?


A lottery is a gambling game in which players pay for a chance to win a prize, often a large sum of money. It’s the most popular form of gambling in the United States, and state governments promote lotteries as a way to raise revenue without raising taxes. But how much revenue lottery proceeds actually generate for state budgets, and whether that’s worth the trade-offs for people who lose money, remains a matter of considerable debate.

It’s not hard to understand why so many people play the lottery. There’s a basic human urge to take risks and hope for the best. But the problem is that, in reality, the chances of winning are extremely low. Even so, people keep playing — and losing — billions of dollars every year. And state governments keep promoting them, despite the evidence that they’re not a good deal for taxpayers.

Some state legislatures have tried to limit the number of games or reduce the odds of winning by increasing the minimum prize amount or decreasing the probability of a certain result, such as picking all six numbers in a drawing. Others have regulated the number of tickets sold and required participants to buy more than one ticket in order to qualify for a prize. Some have attempted to control the number of prizes by limiting the total amount that can be awarded each week or month.

The use of the casting of lots as a means of making decisions or determining fates has a long record in history. The Bible includes several references to it, and the first recorded public lottery took place during the Roman Empire for municipal repairs in Rome. The modern lotteries we know today were developed in Europe after World War II, when the lottery became an important source of public funding for government programs, including education.

Although there are a few exceptions, most lotteries offer the same basic structure: a central organization that sells tickets and collects stakes. Most also distribute the prizes, either directly to winners or to the agencies that run the lotteries. The most common prizes are cash or merchandise, but some give away houses and other real estate.

A significant proportion of lottery proceeds are used for education, but the rest is usually put into general fund accounts for the state or city. Some states also offer a special lottery for state employees.

Most studies show that the popularity of lotteries is largely tied to public perceptions of their purpose and benefits. When public officials emphasize that lottery money is used for a specific, legitimate public need like education, it helps to boost the appeal of the lottery and overcome skepticism about government spending. But the objective fiscal condition of a state does not appear to have any influence on when or whether it adopts a lottery, and the lottery’s popularity has remained high even during periods of strong economic growth. Its success demonstrates that, in the end, voters want their state governments to spend more, and politicians look to lotteries as a way to get them to do so with less public scrutiny.