In the US, state-run lotteries generate about $34 billion per year in revenue for education. But that money isn’t always spent as promised. In one case, a city built a new school with lottery funds but later closed the building because it had deteriorated beyond repair. In other cases, the money has been diverted to unrelated projects or to pay for things that the public should be able to get for free.
In some places, the government is trying to curb the growth of lottery spending by making it harder to win the top prize. This can reduce the payouts and lower the expected value of a ticket, which has real-world implications. For example, investors sometimes pool their money to buy tickets in a lottery with a large jackpot, and they often keep some of the winnings even after paying out to other investors.
The emergence of the modern lottery was driven by a desire to raise revenue for public services. Lottery opponents questioned the ethics of funding public services through gambling, and they worried about the amount of money that states stood to gain. These critics hailed from both political parties and all walks of life, but they were especially vociferous among devout Protestants, who viewed lotteries as morally unconscionable.
But the defenders of the lottery argued that it was no more immoral than taxes and that state governments could not possibly afford to provide other public services without it. They also pointed out that state governments were hardly immune to the late-twentieth-century tax revolt, and they noted that lottery profits are responsive to economic fluctuations. For example, as incomes fall and unemployment increases, lottery sales rise. In addition, lottery advertising disproportionately targets low-income and minority neighborhoods.