A lottery is a type of gambling in which a prize is awarded by drawing numbers or other symbols. Unlike other forms of gambling, however, the prizes in lotteries are not determined by the amount of money paid for tickets. Instead, the winners are selected by a random process. Some types of lotteries involve a fixed amount of cash or goods while others offer a percentage of the total ticket sales. The latter type of lottery is known as a “revenue share” lottery.
In the early American colonies, public lotteries were often seen as a way to raise money for a variety of purposes, including civil defense, building churches, and other civic projects. Some of the more ambitious ones even attempted to help finance the Revolutionary War. Private promoters also used lotteries as a way to sell merchandise and real estate, as well as to select members of a jury.
After the lottery’s heyday of the 1970s, however, state politicians began to view it as something else altogether: a budgetary miracle. As Cohen writes, with states struggling to fund government services and facing an ever-increasing anti-tax sentiment among voters, the lottery seemed like the perfect answer. It could generate hundreds of millions of dollars and allow state leaders to avoid raising taxes.
The resulting campaigns were effective and persuasive—but fundamentally misleading. For one thing, they wildly inflated the lottery’s impact on state finances. While $502 billion may sound like a lot, it’s actually a drop in the bucket for actual state governments; at most, it accounts for 1 to 2 percent of total state revenue.