Is a Government That Profits From Gambling able to Manage it Well?

As state governments rely more on lottery revenue, pressures to expand the game will only intensify. But a fundamental question arises: Is a government that profits from gambling able to manage it well?

Lotteries have long been used to raise money for a variety of public projects. They were a major source of funds in colonial-era America, helping to finance the settlement of the first English colonies and construction at Yale and Harvard. Benjamin Franklin even sponsored a lottery to fund cannons for the defense of Philadelphia.

The main argument in favor of the lottery is that it is a source of “painless” revenue, with players voluntarily spending their money for a public good. This argument plays particularly well in times of economic stress, when voters fear tax increases or cuts to public programs. However, research has shown that the objective fiscal condition of a state does not seem to have much impact on whether or when it adopts a lottery.

A second argument is that lottery proceeds are earmarked for a specific program, such as education. But this practice obscures the regressivity of lottery revenue. The money that a player invests in a ticket represents the same “economic opportunity cost” as the money that would have been spent on an alternative investment, such as hiring an extra teacher or building a new school.

Finally, many people claim that there are ways to increase the odds of winning a lottery. Some try to play every number combination in the drawing, but this is not feasible for a large lottery such as Powerball or Mega Millions. Others try to study the results of previous draws and look for patterns that might help them choose winners.

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