How Does the Lottery Affect State Budgets?

A game of chance in which tokens are distributed or sold, and the winning ones are chosen by lot: sometimes sponsored by a state as a means of raising funds. Often the winner gets an object or a prize of value; such prizes may be cash, goods, or services.

In 2021, American lottery players spent upward of $100 billion on tickets, making the game America’s most popular form of gambling. But how much of a difference those dollars make in the broader picture of state budgets, and whether it’s worth the trade-offs to people who spend so much on tickets, is unclear.

Cohen traces the modern lottery to the nineteen-sixties, when a growing awareness of all the money to be made in the gambling industry collided with a crisis in state funding. With inflation soaring and the cost of the Vietnam War mounting, many states that had provided a generous social safety net found it harder and harder to balance their budgets without raising taxes or cutting services, both of which were highly unpopular with voters.

So some began promoting state-run lotteries as a solution, arguing that because people were going to gamble anyway, why shouldn’t the government be allowed to pocket the profits? Others argued that legalization would help to level the playing field for Black numbers players, whose participation was limited by law enforcement officials who routinely stopped, interrogated, and arrested them for no apparent reason. Still others, including a number of white legislators, supported legalization because they believed that it would ease friction between state police and African American residents, who saw numbers games as an alternate source of income to illicit drug dealing.