Lotteries in the United States

In the early years of America, governments often relied on lotteries to fund a wide range of services–including civil defense and charity. During the seventeenth century, lottery profits were earmarked to support Harvard and Yale, while the Continental Congress even attempted to use them to pay for war.

But as Cohen explains, these lottery funds were often regressive. They disproportionately affected people of color and the poor, who were more likely to be in debt or otherwise vulnerable.

While these problems aren’t unique to state lottery, they became more acute as the industry grew and spread across the country. By the mid-twentieth century, legalization advocates were no longer able to sell the lottery as a statewide silver bullet.

Instead, they had to come up with a more narrowly targeted campaign strategy. Rather than claiming that a lottery would float most of a state’s budget, they began arguing that it would cover a single line item–usually education, but sometimes elder care or public parks or aid for veterans.

When the lottery money was finally analyzed, it turned out that, over its first years, the resulting revenue covered, on average, about one per cent of a state’s general revenues. That’s a small amount, but it remained significant.

As a result, many state legislatures enacted laws limiting how much lottery money could be used for other purposes, including schools. This was particularly problematic because the lottery is regressive and draws its revenues from people who can least afford to play.