The Official Lottery

The official lottery is a game of chance operated by a state government that offers a cash prize for a small stake. The prize amount typically exceeds the dollars paid out, so the lottery earns a profit for its sponsoring state. This is a different model than other types of gambling, which offer more substantial prizes in exchange for larger stakes.

Cohen argues that the modern American lotteries started in the nineteen-sixties, when growing awareness of how much money could be made through the gambling industry collided with a crisis in state finances. With population growth, inflation, and the cost of wars weighing on states, balancing budgets became difficult without either raising taxes or cutting services.

State lotteries became a popular way for politicians to avoid raising taxes while maintaining state services. The first legal state lottery was launched in New Hampshire in 1964, followed by thirteen others. In the early nineteen-sixties, these state-run lotteries were heavily marketed with the message that the proceeds would go to education and other public programs. However, the advertising campaign wildly inflated the impact of lottery funds on state finances.

In reality, the profits of state-run lotteries are minimal compared to the total revenue generated by gambling—Cohen estimates that legalized gambling generates about $600 billion a year. The lion’s share of that revenue comes from the huge number of people who play the lottery, even though winning a single ticket is extremely unlikely. In addition, the lottery’s marketing strategies—including everything from slick promotional campaigns to the design of scratch-off tickets—are designed to keep players hooked.