Throughout history governments have used lotteries to raise revenue in a variety of ways. Unlike taxes, which are unpopular and inequitable, lottery proceeds generally meet with broad public support, even during times of economic stress, when state government budgets may be threatened. The reason for this widespread approval is simple: Lottery proceeds are seen as benefiting a general “public good,” in particular education, and thus can be justified as an alternative to raising taxes or cutting public services.
In the early colonies lotteries were used to finance many public projects, such as paving roads, building wharves, and constructing churches. Lotteries were also instrumental in raising money to help finance the Revolutionary War.
Today, state lotteries are more sophisticated and offer a variety of games to attract players. But they are still largely a tool of the state’s coffers, and the majority of lottery participants come from middle-income neighborhoods. The poor participate at far lower rates and receive fewer benefits from the game than do middle-class and wealthy communities. As a result, the majority of lottery revenues are diverted from the neediest communities to support other priorities.
When the lottery is introduced in a state, revenues usually expand rapidly and then plateau or decline. To keep revenues high, a constant stream of new games must be introduced. The development of these new games is the primary function of lottery executives, who must balance consumer demands with state budgets and regulatory requirements.
In general, new games must be less expensive than existing ones. They should also be able to generate substantial revenues in a short period of time. Moreover, the new games must appeal to a wide range of demographic groups, including men, women, and children. A number of these new games are targeted specifically at the youth market, which is increasingly important for lottery operators.
Adding new games is also necessary to avoid growing player boredom, since winning tickets are typically not available until a drawing weeks or months in the future. The new games must be marketed as attractive alternatives to the old ones and must be advertised in an effective way. Lottery advertising is dominated by sexy images and catchy music, but few of these messages reach the audience that matters most.
In general, the success of lottery marketing is related to the state’s political environment and its culture. Many state legislatures and executive branches do not have a comprehensive gambling policy, so lotteries are often made up of piecemeal decisions. In addition, authority over the lottery is divided between the legislative and executive branches, so that the general public welfare is taken into account only intermittently. Despite these hurdles, most states have maintained their lotteries because they are popular with the public. Moreover, lotteries do not impose as high a cost as taxes or other vices that governments impose to raise revenue. In fact, the popularity of lottery games has been demonstrated by the fact that most state legislators voted in favor of the lotteries when they were authorized.