The Official Lottery – How It Works

The term “official lottery” describes any lottery operated by a state government that offers cash prizes. Lotteries have become an increasingly common source of public revenue in recent years, as states scramble for ways to boost spending without enraging anti-tax voters. But a closer look at how the games operate reveals that they are not merely an alternative to taxes; they can actually subsidize other state spending priorities.

State lotteries typically begin with a legislative monopoly; establish an independent public corporation or agency to run the game (as opposed to licensing private firms in return for a share of profits); start small, with a handful of relatively simple games; and then, fueled by demand, continually expand the game’s offerings in terms of new games and prize amounts. This constant expansion is often accompanied by declining revenues, a phenomenon that is known as the lottery “boredom factor.”

Regardless of their size, lotteries rely heavily on publicity. Huge jackpots generate huge sales, and the resulting free publicity earns the games a tremendous amount of advertising on news websites and television broadcasts. This strategy can be very profitable for lottery officials, but it comes with a price: Super-sized jackpots also tend to draw criticism, as do the fact that most ticket sales come from middle-income neighborhoods, and that low-income communities are disproportionately represented in the game’s players and revenues.

The roots of the modern lottery date back to medieval Europe, where towns used them to fund civic projects. The practice was popular in early America, too; Benjamin Franklin ran a lottery to raise funds for a militia against French marauders, and John Hancock and George Washington used them to finance construction of Boston’s Faneuil Hall and a road across Virginia’s mountains, respectively.

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