Lottery As a Tax Subsidy


Lottery pengeluaran sgp is a popular form of gambling in which numbers are drawn at random to determine winners. It is sometimes criticized for encouraging addictive behavior and regressive effects on low-income people. State lotteries are also a major source of government revenues. Some critics have argued that they are predatory and should be abolished. Others have praised the lottery for its ability to raise money quickly and efficiently.

Many governments have used lotteries to fund public projects, including building the British Museum and repairing bridges in America. In the fourteenth century, the practice became common in the Low Countries. In the seventeenth century, lottery proceeds helped finance the European settlement of America despite Protestant proscriptions against gambling. In the eighteenth century, the lottery was even tangled up with slavery. George Washington managed a Virginia-based lottery that offered human beings as prizes, and a formerly enslaved man, Denmark Vesey, won a South Carolina lottery and went on to foment a slave rebellion.

In modern times, a lottery is often run to give away goods and services for which there is high demand but limited supply. Examples include the lottery for units in a subsidized housing block and kindergarten placements at a reputable public school. A more familiar type of lottery is a financial one in which participants pay for a chance to win a prize by matching a combination of numbers on a ticket with those randomly selected by machines.

The term lottery is thought to come from the Middle Dutch word loterij “fateful drawing” or, according to other scholars, a calque on Middle French loterie “action of drawing lots.” While it is true that a small percentage of ticket holders win big prizes, the overall payouts are regressive and do not stimulate the economy. In addition, the state imposes a significant tax burden on winners, which can be a substantial drain on their incomes.

While lottery critics have focused on the regressivity of winnings and the impact of predatory practices, they have largely ignored a key factor: the lottery’s role as a tax subsidy. Lotteries are an important part of the government’s budget, and their popularity has made them an attractive source of revenue for states that do not want to hike taxes.

Cohen has gathered a wealth of data on the operations of state lotteries and concludes that, given their regressive nature and their role in fostering gambling addictions, their regressive fiscal contributions, and their skewed effect on social mobility, they should not exist at all. But, as he acknowledges, this advice is unlikely to be followed anytime soon.

Nevertheless, his book offers an important perspective on the lottery as it has evolved over time. As a result, it is well worth reading. It is not only a valuable history of the lottery but also an in-depth discussion of government policy. As it happens, most state lotteries do not publish demand information. This data is available to researchers, however, and the information can be helpful in evaluating state lotteries.