The Official Lottery is a Subsidy

The state lottery is a big business, with Americans spending upward of $100 billion on tickets each year. But what is it really doing for us? While proponents like to frame it as a way to fund education and other public services without raising taxes on the middle class and working classes, that’s not entirely true. The truth is that lottery money is a subsidy, one that may not be worth the costs.

State lotteries are private gambling games run by individual states. They are regulated and overseen by the state, but they are not subject to any federal oversight or taxation. As a result, they have an incentive to tell voters all the good that state lotteries are doing—even though those claims are often overstated or based on questionable data.

Historically, lottery money has been used for everything from building churches to financing ships to the Virginia colony to buying land in the American colonies. Its popularity in early America can be partly explained by exigency; as Cohen points out, the country was “defined politically by its aversion to taxation,” and it also “was short of revenue for a host of civic projects.” Lotteries were a popular alternative to paying taxes.

But critics were vocal. Devout Protestants saw government-sponsored lotteries as morally unconscionable, while Catholics tended to be the most supportive. In the end, however, mismanagement and malfeasance swept away the first era of state lotteries—though not all states did so. The Louisiana State Lottery Company, for instance, was so corrupt that it took a federal act to kill it off.

Today, state lotteries are still an important source of revenue, but they are a bit less controversial. They aren’t a major funding source for the social safety net, but they can provide funds to meet modest goals. In the immediate post-World War II period, for example, many states were able to expand their array of public services without dramatically increasing taxes on the working and middle classes. It’s not hard to understand why that arrangement came to an end when inflation accelerated and the Vietnam War added to the cost of military expenditures.

Despite the controversy over how lotteries are marketed and promoted, they remain a significant part of American culture. Whether they are worth the costs is a matter of personal opinion and a decision that should be made by each state’s citizens. The New York Times welcomes readers to share their views on this subject, but please keep them civil and stay on topic. If you have a question or comment, contact the editorial team. We will review your submission before posting it to the site.