Should You Play the Official Lottery?

For a long time, lottery advocates could simply point to state budget figures to sway public opinion. They portrayed lotteries as “budgetary miracles, the chance for states to make revenue appear seemingly out of thin air.” They dismissed ethical objections by arguing that if people were going to gamble anyway, governments might as well pocket the profits. The argument proved effective.

In an era defined politically by an aversion to taxation, this was an attractive selling point for politicians. In addition, as Cohen points out, early America was short on revenue and long on public projects like roads, canals, churches, and colleges. Harvard, Yale, and Princeton all got their start via lotteries, and the Continental Congress used one to help finance the Revolutionary War.

By the 1980s, as states searched for solutions to budget crises that wouldn’t enrage voters and as public opinion soured on the poll tax, more than a few started running state-run lotteries. Soon after, the first multi-state games were created by groups of lotteries in an effort to create larger jackpots and attract more players. Today, there are 48 lotteries in the United States, and most belong to multi-state lottery consortiums that include New Hampshire and Vermont.

A word of caution to those thinking about trying their hand at the official lottery, though. In most countries, including the United States, winners can choose whether to receive their winnings as an annuity or in a lump sum. Winners who choose the latter can expect to pocket a smaller sum, because of withholdings and income taxes.