Lotteries are a popular way for states to raise money. Almost all states now sponsor one. Lottery proceeds have supported many public projects, including highways, schools, hospitals, and local government programs. In addition, lottery money has financed college scholarships, professional sports teams, and a variety of other activities. Despite the wide range of uses for lottery proceeds, critics have a variety of objections. Some argue that lotteries promote addictive gambling behavior, have a disproportionate impact on lower-income groups, and are at cross-purposes with the state’s legitimate role of raising tax revenue.
Several states have adopted lotteries in recent years, inspired by New Hampshire’s 1964 launch of the modern era of state-sponsored lotteries. The evolution of a state lottery has generally followed a pattern: the state legislates a monopoly for itself; establishes a state agency or public corporation to run the lottery (as opposed to licensing a private firm in exchange for a share of the profits); begins operations with a small number of relatively simple games; and, under pressure for additional revenues, progressively expands the lottery in size and complexity.
In general, people buy lottery tickets to increase their expected utility. If the entertainment value of winning is high enough, a person’s monetary loss will be outweighed by the total utility gained from the ticket purchase. In fact, the utility gained is so great that many people would even be willing to lose a large sum of money in order to win.