A lottery is an arrangement in which prizes (usually money) are allocated by a random procedure. The term also describes a process of selecting jury members, filling vacancies in sports teams among equally competing players, or other arrangements in which a random selection determines choice.
In the nineteenth century, lotteries became widespread in England and America. They helped finance European settlement and even, as Thomas Jefferson put it, “some of the most venal swindles of the period.” They were often tangled up with slave trade and enslavement. George Washington managed a Virginia lottery that offered human beings as prizes; Denmark Vesey purchased his freedom through one and went on to foment slave rebellions.
State-sponsored lotteries have been around for a long time, but their popularity has soared in recent decades. This resurgence coincided with the nation’s late-twentieth-century tax revolt, as income inequality grew and job security and pensions eroded. In addition, people’s dreams of acquiring huge amounts of money through the lottery seemed more and more attainable as they watched the jackpots grow on their television screens.
The main argument in favor of the lottery is that it raises a large amount of revenue for the state without raising taxes. The reality, as Clotfelter and Cook point out, is that state governments must pay out a respectable percentage of total ticket sales in prize money, which reduces the amount that’s available for other purposes like education. This leaves lottery revenues not transparent in the same way as a normal tax, and consumers aren’t always aware that they are paying an implicit state tax whenever they buy a ticket.