Lottery Profits


Since the nineteen sixties, when America began to face budget crisis with soaring inflation and the cost of the Vietnam War, lotteries have become a popular method for raising money. They are easy to organize and widely popular with the public, which largely treats them as a harmless form of gambling. State lotteries promote themselves as sources of “painless revenue” — a way to raise large sums of money without the burden of raising taxes or cutting services, which would prove extremely unpopular with voters.

Lotteries are essentially traditional raffles in which a prize is won by people who buy numbered tickets. The numbers are randomly drawn and the winners are announced at some future date, weeks or even months out. As a result, players tend to come from middle-class neighborhoods and far less from poorer ones. They spend an average of $27 a week on tickets and are far more likely to play scratch-off tickets than daily numbers games.

Lottery profits are derived from a wide variety of sources including ticket sales, promotional expenses and the percentage of prizes left over after subtracting costs. The latter includes the profit of the lottery promoter and any taxes or other revenues that have been deducted. Lottery promoters typically seek to maximize ticket sales by increasing prize amounts and the number of prizes, offering more lucrative promotional campaigns and advertising and adding new games. Revenues often expand dramatically in the early years, then level off or begin to decline, which prompts the introduction of more sophisticated and expensive games.