In addition to raising funds for a wide range of state initiatives, lottery proceeds help fund local services like public schools, street maintenance, veterans programs and pensions for city workers. The money also boosts the overall tax base.
But some people find lotteries addictive, causing them to spend more than they can afford. And others worry about the regressive impact of lottery revenues on lower-income groups. These concerns are important to consider, but they must be weighed against the benefits of lotteries.
When it comes to state-run lotteries, a key element of winning and retaining broad public approval is the extent to which proceeds are seen as benefiting a specific public good, such as education. This argument is particularly effective in times of economic stress, when the prospect of a tax increase or cut in public services looms large. But studies have also shown that the objective fiscal circumstances of the state do not seem to have much bearing on whether or when a lottery wins public approval.
Critics also charge that lottery advertising tends to be deceptive, with many promotions exaggerating the odds of winning and inflating the prize money (lottery jackpot winners typically receive their prize payments in equal annual installments over 20 years, with inflation and taxes dramatically eroding the value). And critics point out that the business model of the lottery encourages the creation of extensive specific constituencies, including convenience store operators; lottery suppliers; teachers, especially those states that earmark lottery revenue for education; and state legislators, who quickly become accustomed to the additional cash flow from the lottery.