Problems and Concerns of the Lottery Industry

Problems and Concerns of the Lottery Industry


Lottery is a form of gambling in which numbers are drawn from a hat or machines and winners receive prizes that are usually cash but can also be goods or services. State governments have long promoted the lottery as a source of revenue and, since New Hampshire launched the modern era of public lotteries in 1964, it has become a popular activity in most states. This has produced a number of problems. Some involve the dangers of problem gambling and others concern the question of whether promoting gambling is a proper function for the government.

Historically, private organizations have conducted lotteries to raise money for such purposes as building colleges and other institutions. Lotteries have been a major element in the financing of such famous institutions as Harvard, Dartmouth, Yale, and King’s College (now Columbia) and helped finance several other colonial settlements in America. Privately organized lotteries became common in England and later spread to the colonies, where they were able to attract large crowds despite strong Protestant proscriptions against gambling. The lottery also grew in popularity in the United States as the country became more industrialized and wealthier, where a growing middle class sought to relieve the burdens of higher taxes and increasing debt.

The modern lottery is a multi-billion dollar industry and, as such, has become the subject of intense scrutiny. Some of the more prominent criticisms focus on the problems with compulsive gamblers and the alleged regressive effect on low-income populations. But the most important issue is that lottery revenues are increasingly dependent on a small number of large-volume players who have disproportionately increased their participation in recent years, while other groups have shrunk or stopped altogether.

It is the disproportionate increase in these “high-frequency” players that has led to a growing problem with state lotteries, and has also given rise to concerns about other forms of government-sponsored gambling. These include games for units in subsidized housing developments and kindergarten placements at a favored school.

Although many people would prefer to spend money on things like home ownership, education, and medical care than gambling on a chance of winning the big jackpot, it is the high-frequency gamblers who have driven the lottery’s recent growth and are now in control of its future. In order to remain viable, the industry must continue to grow and expand into other types of gambling – including keno and video poker – and pursue aggressive marketing strategies. This is at odds with public policy and the public’s interests, which are best served by limiting lottery advertising. Moreover, if the lottery is going to promote gambling, it should be done so in a way that minimizes its negative impacts on poor and problem gamblers. This requires an understanding of the psychology and economics of gambling. It also requires a willingness to examine the assumptions and ideologies that drive gambling behavior, and to reject those that are irrational. If that can be achieved, the future of the lottery looks bright.