How Lottery Advertising Affects Public Programs


The lottery is a popular form of gambling in which numbers are drawn to determine winnings. It is often promoted as a fun way to dream about having a fortune at the cost of a couple bucks. But for many people, especially those with low incomes, it is a costly way to fantasize and often leads to serious financial problems. In addition, critics claim that the advertising is deceptive in terms of presenting misleading information about the odds of winning and inflating the value of the money won (most state lotteries pay jackpot prizes in equal annual installments over 20 years with inflation dramatically eroding the current value).

Although making decisions and determining fates by the casting of lots has a long record in human history, public lotteries have only recently gained in popularity for the purpose of raising funds. State governments, which are dependent on lottery revenues, have little incentive to regulate the industry. This has resulted in a situation where state officials are constantly responding to and driving the continuing evolution of the lottery rather than taking a broad view of its overall impact.

The process of establishing state lotteries usually follows a similar pattern: the government legislates a monopoly for itself; creates a private corporation or state agency to run the lottery, in return for a share of the profits; begins operations with a modest number of relatively simple games; and, under pressure for additional revenue, progressively expands the number and complexity of games.

In the United States, there are a total of 46 state-sponsored lotteries that raise about $19 billion in revenue annually. Almost all of the money raised in these lotteries is distributed as prize money for winning numbers. Some states also use a portion of the proceeds to finance public programs.

While state officials are unable to control the overall success of the lottery, they have some control over how the game is advertised. But it is important to remember that the vast majority of lottery advertising is promotional in nature and is designed to get potential customers to buy tickets, not as educational or informative material. In addition, the vast majority of state-sponsored lottery advertising targets specific constituencies such as convenience store operators (who typically pay commissions to lottery vendors); suppliers of goods and services used in lottery operations (heavy contributions by these providers to state political campaigns are routinely reported); teachers (in those states where some lottery revenues are earmarked for education); etc.

While it is important for the government to provide educational materials about lotteries, it is equally important to address the issues of problem gambling and the alleged regressive effects of lottery games on lower-income groups. In fact, the problem of compulsive gambling and the regressive effect of lotteries is exacerbated by the fact that lottery ads are primarily promotional in nature. Moreover, as the various lotteries continue to evolve, they are likely to polarize their audiences further, creating constituencies that will be difficult for any state official to ignore.