The Public Interest and the Lottery
In a story that begins in ancient Greece and moves through medieval England, Italy, the Americas, and a host of other places, Cohen recounts how lotteries have evolved from a way to dish out small cash prizes among paying participants to a powerful tool of state finance. For most of its modern history, lottery profits have been a “painless” source of revenue, allowing governments to increase spending without raising taxes or cutting services—which both would be unpopular with voters. But this “golden age” of low-cost state funding has ended. Lottery revenues have plateaued, and states are now forced to find new ways to raise money—which is where games like keno and video poker come in. The question is whether the proliferation of state-sponsored gambling is in the public interest, or if it will simply create new problems.
The first problem is that lotteries are a form of gambling and, as such, can be addictive. And while many people play for the pure joy of winning a prize, others see it as a substitute for more substantive ways to solve their problems. This is not an insignificant issue, given the societal harms caused by gambling addiction and the regressive impact of lotteries on lower-income groups.
Another problem is that lotteries are government-run businesses. As such, they are designed to maximize revenues through advertising and other marketing techniques. This is not necessarily in the public interest, especially if these techniques are intended to appeal to people who might otherwise ignore state-sponsored gambling. Lottery advertisements frequently present misleading information about the odds of winning and inflate the value of lottery jackpots (which are paid in equal annual installments for twenty years, with inflation dramatically eroding the actual value).
A final problem is that, as a business, lotteries have incentives to promote their product, even if it might not be in the public interest. This means that they tend to promote the idea of the lottery as a game to be played with family and friends, despite the fact that playing this kind of lottery is not a very social activity. In addition, lotteries often present a message that encourages people to spend more than they can afford, which can have negative consequences for compulsive gamblers and other vulnerable populations.
The final problem is that, when state governments rely on the income from a lottery as a source of revenue, they are putting themselves at a disadvantage compared to other states. This is particularly true in the current anti-tax era, when many voters see gambling as a way for states to get away with taxation altogether. It is a dangerous dynamic that has been in place for the past few decades, and one that should not be permitted to continue. A new era of fiscal discipline is overdue, and it is time for state governments to get serious about controlling their gambling industries. The first step is to stop subsidizing the gambling industry with taxpayer dollars.