The Many Ways Government Profits From the Lottery


The lottery is a popular game in which prizes are allocated by chance. While casting lots for decisions and fates has a long history, the lottery as a system for allocating material gains is of relatively recent origin. State-sponsored lotteries are now widely available, and some have grown into massive enterprises generating enormous revenues for states, enabling them to finance a wide variety of projects.

People play the lottery because they enjoy the chance of winning, or perhaps out of some inextricable sense of civic duty. But it’s also worth examining the many other ways that state and federal governments profit from this gambling enterprise.

State officials often claim that lottery proceeds benefit the public by providing “painless” revenue. But that’s misleading. In fact, the lottery benefits convenience store operators; lottery suppliers (heavy contributions to state political campaigns are regularly reported); teachers in states that earmark lottery revenues for education; and many other constituencies with vested interests in the success of the lottery.

In addition to the commissions that retailers take, a substantial portion of winnings is used to pay for staff and overhead for the lottery system itself. The rest goes to the jackpot prize, which grows each time a ticket is sold. The total prize can be paid in a lump sum or an annuity. The latter is better for funding long-term investment goals and guarantees higher total payouts over years. The choice depends on the rules of a specific lottery and the individual’s financial goals.