When you think of lottery, the first thing that might come to mind is a game in which players buy tickets to win cash prizes based on random draws. While those kinds of lotteries do exist, they represent only one type of lottery. A much more common type involves paying to get priority for some kind of benefit, such as the chance to be assigned units in a subsidized housing block or a kindergarten placement at a reputable public school. Such lotteries are often referred to as “resource allocation” or “social selection,” and they are the focus of this article.
In addition to providing a way for people to win money, resource allocation lotteries have a profound impact on social inequality. This is because the lottery tends to be heavily promoted in communities that are disproportionately poor, Black, and Latino. As a result, lottery revenues are largely derived from these groups and, as a result, lottery proceeds are used to fund programs that primarily serve those groups.
For this reason, critics of the lottery argue that it functions as a “resource allocation” lottery and exacerbates social inequality by unfairly targeting poor communities and reducing their quality of life. The reality, however, is more complicated. Lottery opponents usually rely on two arguments to support their views. One is that people who play the lottery do not fully understand how unlikely it is to win, which suggests that their behavior is irrational and they should be allowed to gamble freely. The other is that the lottery is a form of taxation, and that it should be supported because it is an efficient way to raise revenue for government services.
These criticisms are legitimate, but they are also overstated. In the late twentieth century, the growing awareness that there was plenty of money to be made in gambling collided with a fiscal crisis in many states. As population growth and inflation accelerated, state governments struggled to balance their budgets without raising taxes or cutting services, which were extremely unpopular with voters. Lottery advocates responded by arguing that, since people were going to gamble anyway, the government might as well profit from them.
The first records of lotteries that offered tickets for sale with a prize in the form of money date back to the Low Countries in the 15th century, when towns held them to raise funds for walls and town fortifications. In the early seventeenth century, the Dutch developed a national lottery, called Staatsloterij. It is still in operation today, and it is the oldest operating lottery in the world. Other European states soon followed suit with their own state-run lotteries, which were hailed as a painless alternative to higher income and property taxes. The lottery became a central method of funding for the colonies, wars, colleges, and public-works projects. Lotteries eventually spread throughout America, and by the late nineteen-sixties were a mainstay of American society.