Lottery is the process by which people buy chances for a prize based on a random drawing. The prizes can be cash or goods. People can also use a lottery to distribute items that are limited in supply. For example, a lottery might be run to distribute units in a subsidized housing block or kindergarten placements at a reputable public school. This is what we commonly think of as a lottery, but there are other types of lotteries as well.
Historically, state-sponsored lotteries were a popular way for states to raise revenue. The idea was that it would allow them to expand a wide range of services without having to impose particularly onerous taxes on the middle class and working classes. But the fact is that lotteries are a very expensive form of taxation, and they are regressive in nature.
Scratch-off tickets, for instance, make up about 65 percent of lottery sales nationwide. They are very regressive, and they tend to be played by lower-income people. Powerball and Mega Millions are much less regressive, but they still have a significant regressive component.
Lottery commissions rely on two messages primarily. They promote the idea that playing the lottery is fun, and they also try to make it seem as though the money raised by lotteries benefits the state. That’s a misguided message because it obscures the regressivity of lotteries and it obscures how much people are paying for these tickets.