Despite their controversial roots, state-run lotteries continue to be popular with a broad segment of the public. In the United States alone, they raise billions of dollars every year. Some people play the lottery for fun, while others believe that winning will give them a better life. But is promoting gambling really an appropriate function for the government? And does the constant advertising aimed at persuading people to spend their money on tickets actually work?
Until recently, most lotteries operated a bit like traditional raffles, with participants buying tickets for a drawing at some future date, often weeks or even months away. However, innovations in the 1970s changed all that. With the advent of instant games and scratch-off tickets, players could choose their own numbers and know if they had won that day. Moreover, ticket prices fell considerably, and the resulting revenue streams were far greater.
In addition, some states began to earmark a portion of their proceeds for social causes. Those funds now make up a significant portion of many lotteries’ total prize pools. In addition, a number of states have established specialized programs devoted to addressing problem gambling and other concerns.
But critics charge that much lottery advertising is deceptive, presenting misleading information about the odds of winning and inflating the value of the prizes won (lotto jackpots are usually paid out in annual installments over 20 years, with inflation and taxes dramatically eroding their current value). Moreover, a large share of lottery revenues is consumed by promotion costs.
A major problem with state-run lotteries is their fragmented structure. Lottery officials must deal with numerous stakeholders – from convenience store operators to lottery suppliers; state legislators, who quickly become accustomed to the extra revenues; and teachers (in those states in which the lottery’s proceeds are earmarked for education).
In addition to limiting their overall control over the industry, this fragmentation makes it difficult for state officials to address the ethical and social issues raised by the promotion of gambling. Lottery operations are also notoriously susceptible to corruption. In the past, lottery promoters and vendors have bribed legislators, corrupted state employees and even ran illegal gambling rings in cities across the country.
A few states have tried to address these problems by instituting a central oversight agency for the industry. Other states have attempted to limit the role of their lottery offices in order to reduce corruption and conflicts of interest. In a reversal of the old saying, it seems that while governments have no business in running lotteries, they have a hard time getting out of them. Ultimately, the success of a lottery depends on the quality and integrity of its officials, which is not always easy to judge. It will take a great deal of self-reflection and openness to change in this industry to keep it from becoming too big for its own britches.