Since New Hampshire introduced state lotteries in 1964, virtually every other state has followed suit. Yet despite this proliferation of gambling, very little is known about the lottery’s effects on the public.
The basic argument used to promote state lotteries has always been that they are a source of “painless” revenue, wherein people voluntarily spend their money for the benefit of the state. This view is highly attractive to anti-tax advocates, especially in an era when state governments are increasingly dependent on lottery revenues for budget purposes.
After lotteries are established, however, debates and criticism shift to specific features of the lottery’s operations. For example, critics point to the possibility of compulsive gambling by those who play and the regressive effect that lotteries have on low-income individuals (lotto jackpots are typically paid in equal annual installments over 20 years, with inflation and taxes dramatically eroding the current value).
Another concern is that lottery advertising commonly presents misleading information about the odds of winning the prize. And, based on the results of many studies, it appears that lotto players are heavily drawn from middle-income neighborhoods. The problem is even worse with the so-called instant games, such as scratch tickets, which are usually sold at convenience stores and offer much smaller prizes. These games are also a major source of state income and are growing rapidly. In order to maintain and increase their revenues, these games must be constantly expanded with new offerings.