The Lottery – Can Government Manage an Activity From Which it Profits?

In a time when state governments are increasingly reliant on lottery revenues, it is worth revisiting the question: Can government at any level manage an activity from which it profits? Lottery proponents posit that this is possible. In fact, a number of states, including Oregon, have legalized multiple forms of gambling in recent years, as a way to boost state revenue. Yet while these activities are ostensibly managed by state regulators, they are in reality promoted by lottery commissions, which spend enormous amounts of money on advertising and promotional campaigns.

In the book The Lottery, which was published earlier this year by HarperCollins, the author argues that state-run lotteries have become a source of “painless” revenue that politicians can count on without incurring voters’ ire for raising taxes. As states face budget crises, he writes, they look to the lottery for solutions that will not hurt their core constituencies, such as low-income residents. And while lottery advocates claim that the money spent on tickets is entirely voluntary, Cohen demonstrates how state lotteries have a highly manipulative advertising strategy and are geared toward building long-term addiction.

Lottery advertising focuses on two messages primarily. First, it promotes the fun of buying a ticket and the experience of scratching a ticket. Second, it promotes the winning potential of a specific ticket. It is the latter message that is especially effective, and it has shifted the way people think about the game. It obscures the regressivity of lottery play and helps lottery officials convince voters to support state lotteries even as they complain about their growing deficits.

Cohen’s book begins with New Hampshire, which launched the modern era of state lotteries in 1964. He explains how the lottery was originally seen as a way for states to provide a broader array of services without raising taxes on middle- and working-class citizens. But that arrangement began to erode in the nineteen-sixties, as inflation, the cost of the Vietnam War, and other factors began to take their toll on state coffers.

As a result, lottery sales increased, and, as with most commercial products, they are marketed heavily in neighborhoods that are disproportionately poor, Black, or Latino. As a result, lottery advertising is at cross-purposes with the goals of many state governments.

As states grow more dependent on lottery revenues, they also become reliant on other revenue sources, such as gaming tax revenues, which are usually collected from patrons at bars and casinos. This is a problem for the integrity of state gambling laws and raises concerns about state-sponsored addiction. As lottery sales increase, it is crucial that regulators understand how to manage the growth of an activity they created and the ways in which it affects different groups of society. In the end, it is up to state officials to determine whether a gambling promotion like the lottery serves the public interest.

Posted in: Gambling