What is a Lottery?

Lottery is a way of distributing goods or services that are in short supply and where the demand exceeds available resources. Examples include kindergarten admission at a prestigious school, the right to occupy units in a subsidized housing project, and the availability of a vaccine for a dangerous infectious disease. It also refers to the randomized allocation of prizes, often of money, in a variety of games and contests.

Lotteries have a long history in human society—including several instances in the Bible, where the casting of lots was used to determine fates and distribute property. In the early modern period, state-sponsored lottery games became increasingly common, as a means for politicians to generate revenue without having to raise taxes or face an electoral backlash.

The first public lottery was organized in the fourteenth century by Augustus Caesar for municipal repairs in Rome, with prize money in the form of goods (typically dinnerware) awarded to ticket holders. The lottery spread throughout Europe in the fifteenth century, with town records citing the use of lotteries to build towns’ fortifications and help the poor. In England, Queen Elizabeth I chartered the first national lottery, in 1642, with proceeds designated for “reparation of the Havens and strength of the Realme.”

Among the most popular and lucrative lottery offerings are state-sponsored games, which typically rely on a base of regular players to offset the costs of advertising and prize distribution. But as the popularity of online gaming continues to grow, the demographics of lottery play are changing, with fewer traditional players and more superusers—players who purchase a large percentage of tickets and can therefore drive up ticket sales and prizes. As a result, the percentage of lottery profits that go to superusers can climb to 70 percent or more.

For the average player, the odds of winning a major prize are minuscule—about one in seventy thousand. So most people play for entertainment and to enjoy the thrill of trying their luck, rather than for the cash itself. That is a fine way to spend time, but it’s not a valid reason to subsidize the game with taxes.

Lotteries are based on the idea that there is some degree of fairness in the process and in the outcome. But that doesn’t always hold up. Often, the most unfair lottery outcomes involve things that are highly desired—a spot in a prestigious school, the right to stay in a low-income apartment, the chance of getting a life-saving cancer drug. In such cases, the process is rigged against those in need.

Politicians who pushed for state-sponsored lotteries in the immediate post-World War II period viewed them as budgetary miracles, allowing them to expand their social safety nets without raising taxes or risking punishment at the polls. But that arrangement quickly crumbled as state governments struggled to maintain their array of costly programs. The result has been that lotteries are now largely a source of tax revenue for the wealthy—with a price paid by those who need it most.