What is a Lottery?

A lottery is a scheme for the distribution of prizes by lot or chance. Historically, it has referred to a form of gambling in which tickets bearing particular numbers are drawn for prizes—or sometimes to give away property or money. More recently, it has also come to mean a process for awarding scarce goods, such as units in a subsidized housing block or kindergarten placements at a particular public school.

In the early days of the modern state lottery, state governments promoted lotteries by portraying them as a source of “painless” revenue. The state government would collect the proceeds of the lottery, and those revenues could be used to expand services without raising taxes or cutting popular programs. State politicians and voters alike viewed the lotteries as an attractive alternative to more costly forms of taxation, such as higher income taxes.

But this argument has been fading, as studies have shown that lotteries receive broad popular support even in states with healthy fiscal conditions. Lottery revenues are now typically about 60 to 65 percent of all state revenues. And, in fact, the vast majority of those sales are from scratch-off games, which are almost universally regressive and tend to be played by lower-income players.

In the long run, these regressive games will prove to be less profitable than their creators hope. Unless lotteries change their strategy and focus more on offering games that appeal to lower-income players, they will find themselves in a losing position.