In the fourteenth century, citizens in England and other European countries used lotteries to raise money for a variety of purposes. By the seventeenth, the lottery had become a popular form of public entertainment. It allowed people to buy a chance at small prizes without risking much of their own wealth, and it gave state officials a source of “painless” revenue they could count on. As Cohen explains, this logic disregarded longstanding ethical objections to gambling and argued that since people would spend money on the lottery anyway—and thus wouldn’t be paying taxes—the government might as well take its cut.
Early state lotteries were modeled after traditional raffles, where people bought tickets for a drawing weeks or even months in the future. Later, innovations reshaped the industry. For example, the first scratch-off tickets offered a lower prize amount but higher odds of winning, and grew in popularity. Ticket sales rose dramatically, but then levels began to decline. To maintain revenues, lottery operators added new games.
As it turns out, most state officials don’t have a lot of control over the development of lottery products. They make decisions on a piecemeal basis, with little overall oversight. As a result, they often end up with policies and dependencies that they cannot change.
Lottery officials aren’t above using the psychology of addiction to their advantage. Everything about the lottery—from its ads to its math—is designed to keep players coming back for more. This might be a fine strategy for tobacco companies or video-game manufacturers, but it is a terrible one for government.