The Revival of the Lottery in America

Lottery is a form of gambling in which players pay money for a chance to win some prize based on the odds of drawing certain numbers. It has a long history, beginning with the casting of lots to distribute property in ancient Israel. The practice later took root in the Low Countries, where towns held public lotteries to raise funds for town fortifications and charity. Lotteries spread to colonial America, where they played a key role in financing private and public ventures. The foundations of Princeton and Columbia Universities were financed by lotteries, as were canals, roads, bridges, and many other projects. In the eighteenth century, a lottery helped finance the purchase of a battery of guns for the defense of Philadelphia and the rebuilding of Faneuil Hall in Boston.

In his new book, Michael Cohen describes the recent resurgence of the lottery in America. Though he nods to the lottery’s early history, his principal focus is on its modern incarnation. In his view, the lottery’s revival started in the nineteen-sixties when growing awareness of the profits to be made from the business and a state budget crisis collided. As populations and inflation rose, it became difficult for many states to balance their budgets without raising taxes or cutting services, a prospect that was unpopular with voters.

Among the factors that contributed to this fiscal squeeze was a rise in state-sponsored gambling, as well as a growing distaste for traditional forms of taxation, including consumption and income taxes. As a result, the lottery was rediscovered as a way to generate revenue in a way that did not require voters’ consent.

Lotteries, in their modern incarnation, offer multiple ways for people to gamble. Some games are based on the selection of numbers; others offer a chance to match symbols. Players choose the groups of numbers they want to play, and the odds of winning depend on how many in each group match. Most modern games also provide an option for players to let the computers randomly pick their numbers. Typically, the number of selected numbers and the total amount of money won are then announced.

Although there is a wide variation in lottery participation by socio-economic group, most players are middle-income; women and the young play less than men and those with higher levels of education. The poor, on the other hand, tend to buy fewer tickets than those with more income; and the lottery’s total revenue is disproportionately lower among those from low-income neighborhoods. Nevertheless, the rich do play the lottery; and one of the lottery’s great achievements is that it has provided millions of Americans with an opportunity to try their luck at winning a big jackpot. Ultimately, the decision to play is a personal choice, and its popularity depends on whether the entertainment value of the gamble exceeds the disutility of the monetary loss that it entails. In other words, if the probability of winning is high enough, the expected utility of playing outweighs the disutility of losing.

Posted in: Gambling