The Modern Era of the Lottery


A game based on chance in which numbered tickets are sold and prizes awarded to those who match a series of numbers drawn at random. Lotteries are commonly used to raise money for public projects, though they can also be conducted for a variety of other purposes, including awarding subsidized housing units or kindergarten placements. A lottery can be played by individuals or groups, and the winnings are typically paid in an annuity (a first payment when you win, followed by 29 annual payments that increase by 5% each year).

In the nineteen-sixties, says Cohen, the increasing awareness of the money to be made in gambling came together with a crisis in state funding. With population growth, inflation, and the cost of war driving up government expenses, many states found it impossible to balance their budgets without hiking taxes or cutting services—both options that engender outrage among voters. Hence, the modern era of the lottery began.

Early American lotteries were not only hugely popular, but highly effective at generating funds for a variety of public works projects and even churches and colleges. As Thomas Jefferson mused, “The lottery is a way to raise large sums of money with small risks.” And Alexander Hamilton understood that the average person was likely to prefer a little chance of winning much to a great deal of risk for a smaller amount of money.

Initially, lotteries were fairly conventional, with people buying tickets for a drawing that might occur weeks or months in the future. But innovations in the 1970s introduced instant games, such as scratch-off tickets, that allow players to win cash prizes right away. As a result, sales have expanded dramatically. Today, more than half of the nation’s adults play the lottery at least once a year.

The most popular game continues to be the Powerball, which offers a top prize of $1.765 billion. But how can a single ticket possibly deliver that kind of value? And does the fact that these games are run as a business, with an eye to maximizing revenues, necessarily lead to negative consequences for the poor or problem gamblers?

Lottery advertising is a major part of the equation. In order to attract customers, a lottery must promote itself as an entertaining and affordable activity. And that means it must persuade a broad range of people—from high-school graduates to grandparents—to spend a few dollars in the hopes of winning a life-changing jackpot.

In promoting its games, lottery companies must appeal to all these demographics, while at the same time avoiding any perception of being exploitative. This is a delicate task. If the ads are too edgy, they risk offending many people. But if they are too conservative, the ads may be seen as misleading or even dishonest. And that could damage the lottery’s reputation for being a responsible source of revenue, and thus jeopardize its survival as a popular form of gambling. To be fair, the industry has worked hard to minimize these concerns.