The Official Lottery and State Budgets

The lottery is not the first gambling fad to sweep the country. But it’s the one that has brought governments into the business of promoting a vice and arousing public sentiment to use gambling funds for things like schools, roads, parks and other public services. Lotteries have sucked up billions of dollars in the past two decades, making it harder to pass tax increases and saddling state budgets with a large and growing debt.

In the United States, state-run lotteries are generally marketed to raise money for education, and indeed, most of the revenue they generate does go to education, though a small portion goes to other services. But the Howard Center’s analysis shows that state lotteries are regressive, taking a disproportionate toll on low-income citizens. The lottery also creates inequities by directing money to wealthy school districts that are far from poor neighborhoods where most tickets are sold, the analysis says.

But the most significant inequities arise because of the skewed distribution of lottery proceeds, says the report. The report quotes an analysis of lottery data by the nonprofit group Demos that shows that a majority of the people who play the lottery live in poverty or near poverty, and they are more likely to buy tickets in areas with high concentrations of minorities. The result is that “lottery revenues skew toward the wealthiest and most educated parts of society, a distortion that squanders public money and leaves poorer communities behind.”

While legalization campaigns have not been shy about inflating the lottery’s impact on state budgets, they now focus on a single line item—usually education but sometimes elder care or parks or aid for veterans—and say that a vote for the lottery means a vote for that specific service. This narrower argument makes it easier to sell the lottery to voters.

But as the lottery tries to attract more people, the odds of winning go up, and so do ticket sales. This skews the results: The more tickets are sold, the lower the average jackpot prize becomes. If the lottery continues at this rate, it will become impossible to win a substantial sum. But even if the jackpots stay relatively low, there’s a risk that people will stop playing altogether—or at least reduce their purchases—if they realize they have little chance of winning. And that will be a shame. Then the chances of a good education will really decline, as well as other public benefits.