The casting of lots to determine fates or material wealth has a long record in human history (including several instances mentioned in the Bible), but the use of lotteries as a means of raising funds for public works and other purposes is much more recent. The first known public lottery was held during the reign of Augustus Caesar in Rome for the purpose of financing municipal repairs. Historically, state governments have adopted and operated lotteries, using the proceeds to raise revenue for a wide variety of uses.
A typical lottery has many elements in common: a legal monopoly to sell tickets; a mechanism for pooling the money placed as stakes, normally by a hierarchy of sales agents who pass the amount paid for each ticket up through the organization until it is “banked”; a set of rules for the frequency and sizes of prizes; and, finally, a method for communicating and transporting the results of the drawings.
While lotteries are a popular source of public funding, they have many critics, who generally focus on specific features of the operations, such as misleading information about the odds of winning the jackpot, the practice of “flipping” tickets to increase their value, and the perceived regressive impact on low-income groups. In addition, there is a growing concern about the role of gambling in society and the effect on society of people becoming addicted to it.
Although public support for lotteries is widespread, the dynamics of how states develop and manage their lotteries are complex. The initial decision to adopt a state lottery is usually made by state legislators who see it as an easy way to generate “painless” revenues. After a lottery is established, state officials must continually fight to retain and increase the size of the prize pools. This has resulted in the growth of lotteries into new forms of gaming, such as video poker and keno, and into ever more aggressive advertising campaigns.
A major problem in the management of lotteries is that state officials often do not have a coherent policy for dealing with them. Rather, the evolution of lotteries is a classic case of policy making occurring piecemeal and incrementally, with authority fragmented between and within the various branches of government. The result is that the objectives of the general welfare are taken into consideration only intermittently, if at all. A major challenge is to find ways to ensure that the benefits of lotteries are weighed against their costs and impacts on the public. In this regard, some experts have emphasized that the success of lotteries depends on the degree to which the public perceives that they serve a worthy public good. This argument has been particularly persuasive in times of economic stress, when it is easy for politicians to portray lotteries as a painless alternative to tax increases or budget cuts. This dynamic can have negative consequences, however. For example, if state lottery revenues are excessively high, they can erode the political power of democratically elected officials.