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Lottery Revenues Are a Vital Component of State Budgets


Lottery is a popular form of gambling in which numbers are drawn at random to determine a prize. Some governments outlaw it, while others endorse it and organize state-run lotteries. Lottery revenues are a vital component of many state budgets.

In addition to awarding prizes, a large share of lottery funds go toward the costs of organizing and promoting the lottery. This leaves a relatively small percentage available to the winners. Historically, a lottery has tried to balance the need to raise sufficient revenue with the desire to offer attractive jackpot prizes. This has been done by offering a combination of large jackpot prizes and a significant number of smaller prizes.

While the message coded into lottery marketing is that playing is fun and it’s a great way to spend an afternoon, the reality is that lotteries are a serious gamble. There are lots of people who play a lot and invest significant sums in lottery tickets. These are not the people lottery officials want to reach. They try to send the message that lotteries are not for committed gamblers, but they know it’s not working.

When state governments face budget shortfalls, they have two options: cut spending or increase revenue. Raising taxes is politically difficult, especially since it burdens all state residents, so politicians look to the lottery for painless revenue. But unlike the sin taxes that states impose on alcohol and tobacco, lottery proceeds are not an effective deterrent against gambling addiction.