Lottery is a popular pastime in which participants pay a small amount of money and try to win a larger prize by matching numbers or symbols. In the United States, for example, people spend $80 billion a year on state and private lotteries, with prizes ranging from cars to cash and houses. The popularity of lotteries is attested to by their longevity and the fact that they are the most profitable form of gambling in the world, bringing in more than twice as much as table games and horse races combined. In spite of this profitability, it is difficult for governments to manage the lottery in ways that minimize problems and maximize benefits.
Public policy regarding lotteries is often made in piecemeal, with individual departments or agencies making decisions without a general overview of the issue. This can make it difficult to address overall issues, including the effects on society, because the authority and pressures relating to the lottery are scattered throughout government. Furthermore, the evolution of a state’s lottery can occur with little or no public debate and is usually influenced by special interests such as convenience store operators, lottery suppliers (who often contribute to political campaigns), teachers in states where proceeds are earmarked for education, and state legislators.
The history of the lottery is a perfect example of the way that public policy can be driven by special interests and short-term considerations. In the seventeenth century, for instance, it was common in Europe to organize a lottery in order to finance everything from town fortifications to poor relief. This practice spread to America despite Protestant prohibitions against gambling, with Benjamin Franklin sponsoring a lottery in 1745 for the purpose of raising funds for cannons to defend Philadelphia from the British.
After New Hampshire introduced its lottery in 1964, other states quickly followed suit and state-run lotteries are now established in 37 states. Nevertheless, debates about the merits of the lottery are frequently focused on specific features of its operations, such as its potential for compulsive gambling and regressive impact on lower-income groups.
A key feature of the operation of state lotteries is that they typically involve a large pool of money, from which the costs of running the lottery and its prizes are deducted. A percentage of the remainder is used for administrative purposes and profits. This means that it is important to balance the desire for a few large prizes with the need for frequent, low-prize offerings in order to maintain or increase revenues.
It is also necessary to design the structure of the lottery in order to ensure that its revenues do not become a source of dependency on state governments. This is because the lottery’s popularity can be influenced by political considerations that have nothing to do with the state’s actual fiscal health, such as the prospect of tax increases and cuts in government programs. Lotteries are therefore susceptible to political manipulation and must continually introduce new games in order to retain public approval.