Point: State Lotteries Are Needed

By Hart, Blake; Sofley, Jonathan | International Social Science Review, Spring-Summer 2004 | Go to article overview

Point: State Lotteries Are Needed


Hart, Blake, Sofley, Jonathan, International Social Science Review


The current economic climate in the United States has adversely affected almost every corner of the marketplace. With most sectors of the work force experiencing layoffs and hiring freezes, less money is coming into households, and, as a consequence, states and local communities are receiving less revenue from tax collection. States are continuously in search of revenue to supplement rapidly declining general funds. This search has drawn many state legislatures to support state-sanctioned lotteries as a viable measure to increase state revenues.

Economic decline has spurred state governments to find ways to meet financial needs without imposing new or higher taxes on local residents. State lotteries provide a valid means of voluntary taxation to allow for such worthy goals as the growth of education, welfare programs, and transportation upgrades. Without a state lottery, legislators are compelled to impose higher taxes upon citizens to meet these needs. Lotteries thus provide essential funds for state programs through voluntary taxation.

Lotteries have been a tool used by governments, civic groups, and private charities to fund public services for over 500 years. (1) The first commercial lotteries appeared in Belgium in the 1400s, gained popularity, and spread across Europe to Italy and England. (2) American history provides several examples of lotteries used to benefit states and their citizens. In 1826, for example, the Virginia legislature granted former President Thomas Jefferson authorization to hold a lottery to sell his properties in order to alleviate some of the large debts he had accumulated. Jefferson, however, never actually held his lottery. (3) In seeking to rebuild the South after the Civil War, Southern states used lotteries to fund state programs. (4) Currently, a number of states use the lottery to fund public services. Georgia, South Carolina, and Tennessee each use state lotteries to support education programs. The state lottery is an attractive option to legislators because citizens are not compelled to contribute and state revenue is enhanced by the proceeds of this "voluntary form of taxation." (5)

In his essay "Financing Public Goods by Means of Lotteries," the economist John Morgan argues that "relative to the standard voluntary contributions mechanism, lotteries: (a) increase the provision of the public good; (b) are welfare improving; and, (c) provide levels of public good close to first-best as the size of the lottery prize increases." (6) In short, lotteries benefit states. Proceeds from state lotteries go towards public goods such as education, or, in the case of Indiana, transportation. (7) Not only do funds collected through state lotteries help primary and secondary education, they also contribute to the welfare of individuals as educational lotteries allow those who could not afford higher education to receive financial assistance for a college education. Since state lotteries support the public interest by contributing to public services, they are a useful and viable financial resource for states.

Properly managed state-sanctioned lottery programs have helped states raise over thirty billion dollars in revenue nationally. (8) Many states reserve lottery proceeds for certain areas such as university scholarship funds and early childhood programs. This system has been especially successful in Georgia, which, in 1995, "provided $85 million in scholarships which allowed more than 100,000 Georgia high school graduates to receive post secondary education ... also $157 million allowed 48,000 four year olds to attend free pre-kindergarten." (9)

Another public benefit derived from state lotteries is found in the jobs created by these lotteries and the programs they help fund. More than 8,000 jobs in Georgia are directly attributable to the state lottery and its funded programs. …

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