How Lottery Proceeds Are Used to Fund Government Initiatives

In the days before state governments could easily raise large amounts of money through taxes, they turned to lotteries to finance projects like roads, canals, schools, and colleges. Benjamin Franklin even held a lottery to raise money for cannons during the Revolutionary War, though it failed. In more recent times, lottery proceeds have been used to finance many governmental initiatives including a variety of social safety-net programs. The main argument used to promote the lottery is that players voluntarily spend their own money in exchange for a small chance of winning a substantial sum, and that this arrangement can serve as a substitute for more onerous taxes on the general population.

However, this claim is deceptive in two important ways. First, a lottery is still a form of gambling. The prizes are won by chance, and even the most avid lottery player will admit that there is no real difference between a trifling sum awarded through a lottery and the amount collected from an ordinary tax.

In addition, most states advertise that lottery proceeds help the general public, but this message is misleading. Studies show that the popularity of lotteries does not depend on the actual financial health of a state government, and in fact, they can win wide approval even when a state’s fiscal circumstances are relatively good. Furthermore, studies suggest that the bulk of the money spent on tickets is sucked up disproportionately from middle- and lower-income neighborhoods.