What is a Lottery?


Lottery is a procedure for distributing something, usually money or prizes, among a group of people according to chance. The term is used most often to refer to a gambling type of lottery, in which participants pay for a chance to win a prize. However, the word also has a more general meaning involving any distribution based on chance. Examples include military conscription, commercial promotions (giveaways of goods or services), and the selection of jury members from lists of registered voters.

The casting of lots to decide fates has a long history, dating back at least as far as the Old Testament and the use of lotteries to give away property by Roman emperors. Lotteries were introduced to the United States by British colonists and were initially regarded with suspicion, particularly among Christians. In fact, ten states banned lotteries between 1844 and 1859. But a great deal of public support was soon generated for state-sponsored lotteries and, by the mid-1880s, almost every American state had one.

Most people know that winning the lottery is a long shot, but they play anyway. The reason is that they think that the entertainment value (and sometimes other non-monetary benefits) outweighs the disutility of a monetary loss for them individually. But what if it’s the last, best or only chance that they have to improve their lives?

This is the premise behind the recent flurry of books, films and other media about Tessie Hutchinson, a small-town woman who rebelled against her town’s annual lottery. In Jackson’s novel, the lottery symbolizes the village’s inarticulate dissatisfaction with its current social order and provides an outlet for anger that would otherwise be directed at victims of that order.

Lotteries have played an important role in American history, including providing a means of financing many government-financed projects, such as paving streets, building wharves, and constructing churches and colleges. The lottery was used to raise funds for the founding of Princeton and Columbia, for example, and to finance the American Revolution and the War of Independence. But the lottery is also an expensive form of taxation, reducing state revenues by up to 20 percent and generating significant administrative costs for states.

State officials tend to emphasize the good things about the lottery—its ability to provide a much-needed source of revenue without raising taxes—and downplay its costs. But the cost-benefit analysis is complex. The costs are difficult to quantify, and they are often lumped together with other gambling costs. The benefits, on the other hand, are easier to calculate: a state’s lottery is supposed to help boost its economy and, by extension, that of its residents. But is it really doing so? A new study aims to find out. For the first time, it combines state data on lottery spending and economic impact with detailed information on individual winners’ spending habits. The results are eye-opening. The study, which was published in the Journal of Political Economy, shows that the lottery is having a negligible impact on overall state wealth and that its benefits are largely offset by the money it takes to administer the lottery.