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How the Lottery Industry Is Responding to Economic Changes


The lottery is a gambling game where players pay a small amount for a chance to win a large prize. It’s an ancient pastime; the casting of lots is cited in the Bible, and Roman emperors used lotteries to give away property and slaves. It has also become a common way for state governments to raise money for everything from road repairs to public education.

Although defenders of the lottery cast it as a tax on stupidity or an exercise in civic duty, it’s more likely that the industry is responding to economic changes and that it’s operating at cross-purposes with the general public interest. As Cohen explains, when America entered the nineteen-sixties in dire financial straights – facing ballooning inflation, rising unemployment, and an enormous war cost – lottery revenues were crucial for helping states balance budgets without raising taxes or cutting social programs.

Until the 1970s, most state lotteries were little more than traditional raffles, in which ticket holders purchase entries for a drawing at some future date, often weeks or months away. But innovation in that decade introduced the concept of “instant games,” such as scratch-off tickets, that let participants win prizes immediately based on combinations of numbers or symbols. These new games were much more popular, and revenue growth accelerated for a while.

But as lottery revenues began to plateau, officials struggled to find new ways to attract and retain customers. They tried a variety of promotional tactics, including aggressive advertising, and they expanded the games available by selling them in more places. By 2003, according to the National Association of State Lottery Directors (NASPL), nearly 186,000 retailers sold state lottery tickets, including convenience stores, gas stations, nonprofit organizations (like churches and fraternal groups), restaurants and bars, bowling alleys, and newsstands.