Throughout human history, making decisions or determining fates by the casting of lots has a long record, including several instances in the Bible. But lotteries distributing money, or other material goods, for profit are much more recent, originating in the West around the time of Augustus Caesar, who organized a lottery to raise funds for repairs in the City of Rome.
State-run lotteries today are a multi-billion dollar industry, and Americans spend more than $100 billion on tickets each year. The lottery’s popularity among the public is often attributed to its perceived benefit to society: states are able to fund a wide variety of services without resorting to onerous taxes on middle class and working class citizens.
This is a compelling argument, but it has its limitations. As Clotfelter and Cook show, the objective fiscal circumstances of a state do not appear to have any influence on whether or when a lottery is adopted. Even when the state is awash in debt, lotteries are often popular.
Lottery marketing campaigns focus on two messages primarily. First, they suggest that the lottery is a fun activity. Second, they convey the idea that winning the lottery is just a matter of luck. Both messages are designed to conceal the regressivity of the lottery and obscure how many people take it seriously, spending large amounts of their incomes on tickets. These are not trivial investments, as they divert dollars that could be saved for retirement or college tuition.