While the lottery’s modern form may be as much a part of American culture as Instagram and the Kardashians, its roots are in Europe’s seventeenth century. By the middle of that century it had become common for the Dutch to organize state lotteries in order to raise money for town fortifications, charity, and a wide variety of public uses. These were often financed by the state, and were popular because they were not perceived to be taxes.
In the early eighteenth century, the growing popularity of the lottery brought it into conflict with Protestant proscriptions on gambling, and a few states banned it completely. However, the growing awareness that there was substantial revenue to be made in the business led to the establishment of a number of private lotteries, and it wasn’t long before state legislatures began considering legalizing their own lotteries.
The lottery is now a large business, with 43 of the fifty US states and the District of Columbia running their own games. State lotteries are run as businesses, with a strong focus on maximizing revenues; advertising is geared toward convincing target groups to spend their money on the game. Inevitably, this promotes gambling, and raises questions about whether a government should be in the business of encouraging people to gamble.
A large percentage of lottery profits go to prizes; the remainder covers costs and profit to the organizer and sponsor, and a portion is used to fund other state or public services. Generally, the prize money must be large enough to attract the interest of potential players; it is not uncommon for a jackpot to reach ten figures. But it is important for the prizes to be distributed in a way that doesn’t disadvantage certain groups of people.
To do this, the prize amounts must be sized to meet the demand of the most loyal customers; those who play most frequently are known as “super users.” To avoid losing the support of super users, the lottery must keep raising its prize levels and introduce new games.
This evolution of the lottery has triggered controversy about its impact, both in terms of its promotion of gambling and its effect on the poor and problem gamblers. Some critics have argued that the lottery is an inappropriate function for the state, particularly given its tendency to promote gambling among the most vulnerable.
Other concerns are more specific to the lottery’s operations, such as its reliance on super users and its use of marketing techniques that appeal to impulsive behavior. But, in general, the lottery has been remarkably successful. Since New Hampshire initiated the modern era of state lotteries in 1964, it has been rejected by only six states. The remaining six don’t have a lottery because they are either religiously or fiscally conservative, or because they already get a share of casino revenues and don’t want a competing state agency to cut into those profits. These states include Alabama, Alaska, Hawaii, Mississippi, Utah, and Nevada, which is home to Las Vegas.