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Lottery is a form of gambling in which numbers are drawn at random for a prize. Some governments outlaw it, while others endorse it and organize state or national lotteries. Lottery prizes are typically monetary, but the term also applies to other types of goods and services. In many cases, government officials administer the lottery and are responsible for enforcing the rules of the game. Some states have laws that limit the maximum prize that can be won, while others prohibit statewide lotteries altogether. In the United States, there are approximately fifty state-regulated lotteries.

Unlike the taxes collected by the federal government and the states, lotteries are voluntary contributions of money by the public. The money is used for the benefit of the public good, whether in education, health care, infrastructure, or the arts. Despite their obvious flaws, lotteries enjoy broad public support, and in states that have them, more than six out of every ten adults play regularly. The first modern state lottery was established in New Hampshire in 1964, and thirteen more started operations during the 1970s, mostly in the Northeast and the Rust Belt.

The success of the early lotteries was due to their ability to raise significant amounts of money for public projects without increasing taxes or other forms of direct government spending. These funds allowed the states to avoid the pitfalls of deficits and borrowing, and to fund important public needs such as roads and bridges, schools, waterworks, hospitals, and prisons. As time passed, however, the luster of these early successes faded. By the late twentieth century, voters were in a mood to revolt against taxes and, in the name of fiscal sanity, they looked to lotteries as a source of “painless” revenue, as opposed to general tax increases.

Politicians, recognizing this trend, eagerly embraced the idea of lottery-generated income, and state governments began to establish a multitude of different lotteries. The basic strategy for each was the same: The state legislated a monopoly for itself; created a state agency or public corporation to run it (as opposed to licensing a private firm in return for a share of the profits); began with a modest number of relatively simple games; and, as the demand for additional revenues increased, progressively expanded the variety of available games and the prizes on offer.

The expansion of lotteries has been accompanied by the emergence of powerful special interests with vested interests in their continued growth, including convenience store owners (who sell tickets and receive a percentage of the profits); suppliers of gaming equipment and services (frequently making large campaign contributions to state political leaders); teachers, who are often awarded lottery proceeds for special projects; and state legislators who, after the lottery begins to generate substantial revenues, quickly become dependent on its continuing flow of cash. In a typical state, as the lottery grows and evolves, these vested interests gradually eclipse the concerns of the general public. As a result, public policy in the lottery arena is usually made piecemeal and incrementally, with little general overview and few opportunities to assess its overall impact on the state’s well-being.