The Lottery Industry


The lottery is a form of gambling in which players pay a fee to enter a drawing for prizes. It is considered a lottery because the outcome depends on chance rather than skill. The drawing is usually done by computer or a random number generator. Lottery revenues are used to provide state programs such as education, health care and public works. Lottery operations are legal in all forty states and the District of Columbia.

In the United States, state governments grant themselves monopolies on lottery operations and do not allow private commercial lotteries to compete with them. This arrangement benefits many state programs, but is controversial among critics who argue that it violates principles of government by allowing private interests to make profits at the expense of the public good.

Despite the moral qualms of some, the lottery has been widely adopted by the American public and is one of the largest sources of state revenue. As of 2004, it was played in forty states and the District of Columbia. Almost 90% of the nation’s adults live in states that conduct lotteries. In addition to traditional forms of the game, some states have also marketed keno and video poker as part of their lotteries.

The lottery industry has experienced rapid expansion and growth. Initially, state officials promoted the lottery as a way to raise money for general government purposes without raising taxes. The argument argued that people were going to gamble anyway, so the state might as well collect fees and use the proceeds to pay for such things as public services and schools in poor neighborhoods. This rationale was largely responsible for the rapid adoption of state lotteries in the late nineteenth and early twentieth centuries.

As the public became more aware of the potential for abuse in lottery operations, concerns about compulsive gambling and regressive effects on lower-income groups were raised. But these concerns were largely overshadowed by the broader tax revolt that swept the country in the late twentieth century. By the early twenty-first century, a large majority of voters approved lottery sales.

Lottery advocates defended their program by arguing that a lottery is different from other types of gambling because it is based on chance and not skill. In addition, they argued that it does not lead to the same problem as other gambling activities because lottery revenues are earmarked to be used for specific purposes, while those from other gambling sources can be spent on anything the legislature chooses.

Critics pointed out that earmarking lottery profits is misleading. When the legislature earmarks lottery funds for a particular purpose, such as public education, it simply reduces by that amount the appropriations it would have to allot from its general fund. The remaining earmarked revenues can be spent for whatever the legislature wishes, including non-educational projects such as tax cuts. In the United States, a wide variety of retailers sell lottery tickets. These include convenience stores, drugstores and pharmacies, service stations, supermarkets and food stores, bars and restaurants, and other retail establishments. In 2003, the National Association of State Lottery Administrators (NASPL) reported that there were 186,000 lottery retailers.