How Lottery Revenues Are Used to Fund Public Works Projects


Lotteries are gambling games in which players bet on a series of numbers drawn at random. They are often organized so that a percentage of the profits is donated to good causes, and they typically have large cash prizes.

The word lottery is derived from the Middle Dutch word “lotinge,” which means to “draw lots.” They were first used in Europe around the 15th century, and their popularity spread throughout the world. In colonial-era America, they were frequently used to fund public works projects such as paving streets, constructing wharves, and building churches.

Historically, state governments have generally sought to use lottery revenues as a source of revenue without violating the public interest. They have usually opted for a monopoly on the operation of the lottery; started operations with a modest number of relatively simple games; and have progressively expanded their operations in size and complexity, particularly through the addition of new games.


Because the lottery is a business with a focus on maximizing revenues, it naturally focuses its efforts on persuading target groups to spend their money on the lottery. This means that much of the advertising is focused on the lottery’s attractive features and how much money can be won. It also tends to over-inflate the value of jackpot prizes, a practice commonly known as “jackpot inflation.”

A lotterie’s popularity depends in part on its perceived utility for an individual or group. If the non-monetary gain from playing is high enough for that person or group, a monetary loss would not be worth the purchase of a ticket.

Some states have adopted a policy of keeping their lottery revenues in check by not offering a lot of prizes, as well as restricting the number of people who can win a prize. However, studies have found that this strategy fails to increase lottery participation or raise revenue, and it can actually hurt the public’s ability to make informed choices about the lottery.

Super-sized jackpots

Because of their perceived newsworthiness, big prize amounts attract a significant amount of interest from the general public. They can generate a windfall of free publicity on television news programs and websites, which can then boost ticket sales even further.

As they are a form of gambling, lottery revenues are regulated by law and are subject to state and federal taxes. Depending on the type of lottery, these taxes may be as low as 1% or as high as 24%.

Whether or not to allow the sale of lottery tickets via the mail

While some lotteries require the use of a computer system for recording purchases and printing tickets, most lotteries are sold in retail shops or by the regular mail. The latter is not only cheaper for consumers but also convenient. Nevertheless, there is considerable evidence of smuggling and other illegal activities related to the sale of lottery tickets through the mail.

Some state legislatures have enacted laws to prevent the sale of lottery tickets through the mail, but these efforts have been largely unsuccessful. This is because smuggling of lottery tickets through the mail is a widespread practice.