In an era of gambling, lottery games occupy a special niche. They are not casinos, horse races or stock markets, but they do provide a way for people who do not have much money to try to get rich fast. It is not a practice that state governments should be in the business of promoting, and some are now rethinking their support for these games.
The prize in a lottery can be a fixed amount of cash or goods, or it can be a percentage of the total receipts. In either case, there is a risk that the lottery will not sell enough tickets to cover the cost of the prizes. Moreover, the lottery organizer must market the game effectively in order to ensure that the prize fund reaches its target.
In the fifteenth century, it became common in the Low Countries to hold public lotteries to raise funds for town fortifications and to help the poor. The prize was usually a house or a farm, with the winner being selected by drawing lots.
By the eighteenth century, American colonists were becoming accustomed to a lavish level of government services, but were also prone to fiscal crises. Lotteries accounted for much of the revenue that funded government infrastructure, churches and colleges. Harvard, Yale and Princeton were all financed partly by lotteries. The Continental Congress even used a lottery to help pay for the Revolutionary War.
Today, states like New York rely on lotteries to bring in about one percent of their annual budgets. But the truth is that lotteries are not a very good way to make money. They tend to be regressive, taking a big share of money from poor people. And, as Cohen points out, they are marketed aggressively in neighborhoods that are disproportionately black and Latino.