The Rise of the Official Lottery

A lottery is a game of chance in which prizes, usually money, are distributed among participants by drawing lots. Its history in America dates back to 1776, when the Continental Congress established a lottery to raise funds for the Revolutionary War. After that, state governments continued to hold lotteries as a way to collect “voluntary taxes”—funds that were donated to public purposes in lieu of taxes imposed by force. These lotteries helped establish American colleges including Harvard, Dartmouth, Yale, King’s College (now Columbia), William and Mary, Union, Brown, and many others. But by the 1800s, corruption in the gambling industry had begun to turn public opinion against lotteries. It was largely religious and moral sensibilities but also, as Cohen writes, “a little bit of public policy and public welfare protection.” By 1890, Congress had passed laws that prohibited interstate lottery promotion and sales, killing the infamous Louisiana State Lottery Company and ending state-run lotteries in America for more than a century.

But in the nineteen-seventies, a growing awareness of all the money to be made in the gambling business collided with a crisis in state funding. As inflation, population growth, and the cost of the Vietnam War rose, state coffers were depleted. In many states, especially those that offered generous social safety nets, it became impossible to balance the budget without raising taxes or cutting services—and both options were politically unpalatable.

As a result, state lawmakers began looking for alternative revenue sources. In 1964, New Hampshire became the first state to legalize a lottery, and thirty-one more followed suit in less than twenty years. Lottery advocates dismissed long-standing ethical objections to gambling, arguing that, since people were going to gamble anyway, the state might as well pocket the profits. The arguments worked.

The success of the lottery gave Scientific Games, Inc., a company that manufactured and sold tickets, a tremendous opportunity to grow its business. The company’s lottery tickets, which featured a scratch-off surface that provided an instant outcome, were popular with many consumers who thought they had some control over their results. They were sold in places where the general public could see and hear promotional materials. They were advertised in television and radio commercials, at airports, and in newspapers.

Despite their popularity, however, lottery proceeds are regressive. They take a disproportionate toll on the poor and the working class, and they discourage necessary tax increases. And if states do raise taxes, the people who are losing out on their dreams of wealth will not be happy to see the money used for schools and other vital public services. That, in a nutshell, is why, as fair and meticulous as he is, Cohen believes that state-run lotteries should not exist in the modern United States.