Gambling in America - Lotteries

A lottery is a game in which people purchase numbered tickets in hopes of winning a prize. A person wins if the number on his or her ticket is the one drawn from a pool of all the tickets purchased for that event. In the case of instant lotteries, a bettor wins if the ticket contains a predetermined winning number. Raffles are a form of lottery in which the prize is usually goods rather than cash.

FIGURE 6.6

Lotteries are created and run by government bodies. In 2004 thirty-eight states, Washington, D.C., Puerto Rico, and the Virgin Islands had operating lotteries. Lottery revenues may go into the general fund of the state or may be earmarked for particular purposes, such as education, parks, or police pension funds. Developments in technology and communications have created many possible ways to conduct lotteries. There are five principal types of lottery games:

• Instant games, in which the player scratches a coating off the ticket to find out whether and what he or she has won
• Daily numbers games, in which the player picks a combination of numbers
• Lotto, or a variation of it, in which numbers are chosen from a large set of possibilities with winners selected periodically—Powerball is a popular lottery of this type
• Video keno, in which the player chooses numbers with drawings held very frequently—sometimes as often as several times an hour
• EGDs, which allow bettors to play a game, such as video poker, and receive an immediate payout

As more and more states have introduced lotteries to raise money for government, people have had the opportunity to do more gambling. State lottery tickets are sold in grocery stores, convenience stores, gas stations, and many other places. When the winnings become unusually large or when two or three states get together for a big lottery jackpot, the lines to buy lottery tickets can be long.

Some states were also looking at the possibility of online lottery ticket sales. In 2004 the Georgia House of Representatives passed a bill allowing online lottery ticket sales of up to $5 per day per person, though it was uncertain whether this law would be upheld if challenged in court.

According to the North American Association of State and Provincial Lotteries, in 2003 Americans bet $45.3 billion on lotteries, up from $38.9 billion in 2001. Per capita sales grew from $150 in 1997 to $175 in 2003. Although lottery sales were increasing each year, the number of Americans who played lotteries was declining, according to a 2003 Gallup poll. In 1999 57% said they had bought a ticket during the preceding year, but in 2003 just 49% said they had.

In general, poor people play lottery games less frequently than middle- and high-income groups. The lottery appeals to young people more than to older people. Most people who play the game report playing it regularly.

A number of studies have shown that while the poor tend to spend a higher percentage of their income on lotteries than do middle- or high-income persons, the lotteries tend to benefit high-income persons because they make greater use of the sporting and cultural organizations that receive lottery funds. Critics of lotteries have observed that if lotteries were considered a tax they would be seen as unfair, taxing the poor disproportionately for the benefit of the better-off.

Furthermore, detractors have also contended that lotteries are generally inefficient. Less than 40% of the funds they generated were returned to the causes they were meant to support, and about 47% was distributed as prize money. The remainder was used up for administration and promotion. Despite their inefficiency and relatively modest returns, governments have favored lotteries because those who buy the tickets do so voluntarily.