As state governments grapple with fiscal crisis, they are constantly searching for new ways to increase the amount of revenue they bring in. One popular strategy is to hold a lottery, in which people purchase tickets for the chance to win big prizes. State lotteries are the most prevalent form of legalized gambling in the United States. This article examines why they are so successful, and why they may also be unwise from a fiscal perspective.
Lottery revenues typically expand dramatically after the lottery is introduced, but eventually begin to level off and even decline. To keep revenues high, lottery administrators introduce a constant stream of new games. These innovations have significantly changed the industry, from traditional raffles to instant-win scratchers and other games.
Critics of the lottery argue that it is deceptive, presenting misleading information about the odds of winning and inflating the value of money won (lotto jackpot prizes are usually paid in equal annual installments over 20 years, with inflation dramatically eroding the current value). Many of these tactics are designed to confuse the consumer, while others are designed to manipulate the psychology of the gambler.
Choosing numbers based on significant dates, such as birthdays or anniversaries, is a common practice, but Harvard statistics professor Mark Glickman warns against it. He says that such numbers often appear on the lists of hundreds of other lottery players and reduce the chances of avoiding a shared prize. Instead, he recommends using Quick Picks or selecting random numbers.