The Importance of Lottery Revenues in State Budgets


In a lottery Togel Via Pulsa, participants buy tickets for small prizes that are based on chance. Prizes can be money, goods, or services. The chances of winning are very low, but the prizes are often large enough to be tempting. Some governments prohibit lotteries, while others endorse them and regulate their operations. Lotteries can be played in many ways, including drawing numbers from a hat, rolling a die, or choosing numbers from a machine. The most popular lottery is the financial one, which awards cash prizes to players who match a series of numbers.

The first lottery in the world was organized by the Romans—Nero was a big fan—and is attested to throughout the Bible, where people cast lots for everything from the right to keep Jesus’ garments after his crucifixion. Later, they were used to settle disputes and for other purposes. Lotteries became more common in the seventeenth and eighteenth centuries, as states short on revenue sought other ways to float their budgets. Despite Protestant proscriptions against gambling, early lottery advocates dismissed ethical objections, arguing that, since people were going to gamble anyway, the state might as well pocket the proceeds.

State-run lotteries are still the largest form of gambling in the United States, raising more than $100 billion annually. But how meaningful this money is in broader state budgets and what it costs to state taxpayers are questions that deserve attention.

Cohen explains that the popularity of lottery games reflects America’s aversion to paying taxes, which was heightened by a tax revolt in the late twentieth century. Lotteries, he writes, provide an alternative to paying taxes, and the money they raise may help pay for some government services that people would prefer not to subsidize with their federal, state, or local income taxes.

But while lottery sales can be explained by decision models based on expected value maximization, the purchase of tickets also makes sense under more general utility functions that take into account non-monetary as well as monetary benefits. If the entertainment value of playing a lottery exceeds its cost for an individual, he writes, then buying tickets can be a rational choice.

While state lottery revenues are not without criticism, they remain an important source of funding for schools, roads, and bridges. And, as Cohen argues, they can help mitigate the effects of the national recession and recession on state spending.

But the lottery’s most enduring legacy is perhaps its role in shaping American values. In the end, even when the odds are against them, most people buy a ticket with a sliver of hope that they’ll win. And, in so doing, they reaffirm a sense of entitlement that the United States should be a land of opportunity for everyone. For that reason, it is a good thing that the lottery is a part of our culture. But it’s a cultural icon that needs to be carefully managed, just like any other public service. —Matthew Ingram is a professor of economics at the University of Michigan and an associate director of its Ford School of Public Policy.