The lottery is a form of gambling wherein people pay money to enter a drawing in which winners are selected by chance. Prizes range from cash to goods. In the United States, the federal government takes 24 percent of the winnings for taxes, and state and local governments may levy additional taxes.
Despite the many controversies surrounding lotteries, they continue to enjoy broad public approval.1 The reasons for this support are largely political: they help to sustain a state’s budget without the bruising effect of raising taxes or cutting public programs. Lotteries are also perceived as a painless form of taxation, especially for those who cannot afford to pay higher income taxes.
Most state lotteries begin operations by creating a public corporation or agency to run them (as opposed to licensing a private firm in exchange for a share of the profits). They typically start with a modest number of games and a relatively simple process for selecting winners. In order to increase revenues, they gradually expand their offerings and adopt new games.
The resulting expansion has produced several significant problems. First, it is difficult for state lottery officials to control the industry because policy decisions are made piecemeal and incrementally. The result is that the general interests of the state are often ignored. Instead, lottery officials often find themselves defending the growth of the industry in the face of ever-increasing demands from specific interest groups, such as convenience store operators, lottery suppliers (who make heavy contributions to state political campaigns), teachers (in states in which lotteries are earmarked for education) and others.