Lottery Revenue Benefits State Governments

The casting of lots for decisions and fates has a long record in human history, though the practice of offering tickets with prize money is much more recent. The first public lotteries were recorded in the Low Countries in the 15th century to raise funds for town fortifications, and later to help the poor.

In the modern era, state governments use lottery revenues in combination with other tax and non-tax sources to finance a variety of programs, including education, economic development, environmental projects, sports facilities, social services for seniors and veterans, capital construction projects, cultural activities, and tax relief. State lawmakers decide where lottery funds are directed and, in many cases, the proceeds are specifically earmarked for certain programs.

But when it comes to the overall benefit of lottery revenue for state governments, it is difficult to measure. Lottery advocates point to the specific benefits of the money raised, arguing that it allows states to spend more without raising taxes paid by most or all state residents. But it is not clear that this argument is persuasive.

State lotteries have created extensive constituencies, including convenience store operators (the main distributors of state lottery tickets); suppliers (heavy contributions to state political campaigns are frequently reported); teachers (in states in which lottery revenues are earmarked for education); and state legislators (who quickly become accustomed to the extra money). These interests have a strong interest in seeing that lottery revenue is used for its intended purposes, and they may be able to influence state legislative decision-making on this issue.