Is the Lottery a Regressive Tax?

A lottery is a game in which participants pay a small sum to receive a chance to win a larger amount of money. The practice of making decisions and determining fates by casting lots dates back to ancient times, including several instances in the Bible and Roman emperors using lotteries to give away property and slaves during Saturnalian feasts. The modern form of the lottery is a government-sponsored game where participants purchase tickets for a chance to win cash prizes by matching numbers or symbols.

In colonial America, private lotteries were common as a way to sell products or land for more money than could be obtained from a regular sale. In 1776 Benjamin Franklin sponsored a lottery to raise money for cannons to fight the British, and Thomas Jefferson held a private lottery in 1826 to alleviate crushing debt. State lotteries began in the 1600s and rapidly became popular, providing a steady source of “voluntary taxes” that helped build Harvard, Yale, and other American colleges.

Historically, state lotteries have operated like traditional raffles, with the public buying tickets for a drawing at some future date, often weeks or months away. However, innovations in the 1970s brought about a transformation of the industry. With the introduction of scratch-off games, lottery revenues exploded. However, these revenues have since flattened and begun to decline. To maintain or increase revenues, lottery officials are constantly adding new games to the mix. Despite this, most experts still consider the lottery to be a regressive tax.