Lottery Marketing 101
Lottery is a form of gambling wherein people buy tickets for the chance to win money or prizes. Some governments outlaw it, while others endorse it and organize a state-run lottery. Lotteries usually involve drawing numbers for a prize. In the United States, there are federal and state laws that prohibit advertising or mailing in interstate commerce promotions for lotteries. Federal law also prohibits the mailing of tickets themselves. Lotteries are a popular source of state revenue, but their popularity is not tied to the actual fiscal health of the states they raise it for.
In the early history of the American colonies, private lotteries were used to sell products and properties for more money than could be obtained in a regular sale. By 1776, the Continental Congress voted to hold a lottery to help fund the revolution. It failed, but the colonists soon established public lotteries and privately organized ones. These lotteries were a successful mechanism for collecting “voluntary taxes.” They were the major source of funds to build Harvard, Dartmouth, Yale, King’s College (now Columbia), William and Mary, Union and Brown universities, and many other colleges.
The casting of lots to determine fates and distribute property has a long history, including numerous mentions in the Bible. Lotteries to raise funds have been held since the ancient world, and the first state-run lottery in the West was organized by Augustus Caesar for repairs in the city of Rome.
Modern lottery operations typically begin with a legislative act that establishes the lottery as a monopoly of the state government and sets forth regulations for how it will be run. The lottery may be operated by the state itself or by a non-profit corporation authorized by statute to conduct the lottery. Initially, it usually begins with a small number of simple games and expands over time with new offerings.
Lottery marketers have traditionally emphasized that the money raised by lotteries is used for a specific purpose. This message is especially effective in times of economic stress, when the specter of tax increases or cuts in other government programs threatens to dampen popular support for the lottery. But studies show that the popularity of lotteries is not linked to a state’s actual fiscal circumstances.
Moreover, because lottery marketing is aimed at maximizing profits, it necessarily involves persuading people to spend their hard-earned dollars on a risky and addictive activity. This practice seems to be at cross-purposes with the public interest. Moreover, there is an important question whether the government should be involved in running an enterprise that promotes gambling to lower-income groups. This is the type of business that would be best left to the private sector, where the risks and rewards are clearly spelled out to consumers.
