Raising Money Through the Lottery


The casting of lots to make decisions and determine fates has a long record in human history. More recently, however, the lottery has been used as a mechanism for raising money to benefit the public, and many states have adopted it.

Although there are some differences among state lotteries, the basic elements are generally similar. The first requirement is a way to collect and pool all stakes, typically accomplished by means of a hierarchy of sales agents that passes money paid for tickets up through the organization until it is “banked.” Each ticket may be printed with a series of numbers or symbols. Once all tickets are deposited, the organization must then have some means of thoroughly mixing them before a drawing is conducted to determine the winners. This process is often automated with the use of computer systems, although a number of other methods can be employed.

Once the winning numbers are selected, prizes must be awarded. The total value of the prize is usually determined by a percentage or share of the pool that remains after the costs of organizing and promoting the lottery, taxes, or other revenue sources are deducted. In most cases, a single large prize is offered along with a number of smaller ones. The winner is then presented with the option to receive his or her prize in a lump sum or as an annuity payable over several years.

One of the main arguments used to promote the lottery is that it enables a state to raise money without increasing tax rates or cutting other public programs. However, studies show that the objective fiscal condition of a state does not appear to have much influence on whether or when it adopts a lottery.