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Is Raising Money From the Lottery Really the Best Use of Public Money?

Almost every state runs lottery games to raise money for public projects. It’s a form of gambling that, when done well, can be a great way to help people who need a little extra cash. But is that really the best use of the public’s dollars?

States are always trying to balance competing goals when they set up lotteries. Some want to promote a particular cause, and others hope that the revenue will allow them to avoid some more onerous taxes on their middle-class citizens. In the immediate post-World War II period, many states decided to enact lotteries because they believed that some form of gambling is inevitable and that if the state ran it it could profit from it without imposing onerous taxation on the working class.

So far, that has worked out pretty well for states. Lottery revenue has increased over the years and state officials have been able to spend money that they would not have been able to otherwise afford.

But it is worth asking whether the message that the lotteries are promoting — that even if you lose, you should feel good about yourself because you did your civic duty by buying a ticket — is actually true. How meaningful is that money to broader state budgets?

The answer to that question is complex. Lottery proceeds get divvied up between administrative and vendor costs, plus toward the projects that each state designates. Some states put a significant percentage of the prize money into education, while others keep it in reserve for emergencies.