Many people purchase lottery tickets as low-risk investments that offer an opportunity to win hundreds of millions of dollars. But this is a form of gambling and, as such, it should be considered a serious matter for anyone who has an addiction to the game. Lottery players as a group contribute billions of dollars to government receipts that could be better spent on education, retirement or other necessities.

In the early days of state-sponsored lotteries, legislators envisioned them as a way to provide essential services without burdening working-class taxpayers. This arrangement worked well in the immediate post-World War II period, when states were able to expand their array of programs and to pay for them without imposing especially onerous taxes on the middle class or the working classes. But with the end of the Cold War and the economic stagnation that followed, the era of easy public financing has come to an end. State governments are now faced with a new and difficult challenge: how to raise enough money to cover the rising costs of their existing social safety nets and expand those safety nets to keep up with inflation.

State lotteries have become a popular answer to this question. Almost every state that has one now has a lottery and, in addition to their general public constituency, they also develop extensive and powerful specific interest groups such as convenience store owners (who are the primary vendors); lottery suppliers (heavy contributions by these interests to state political campaigns are routinely reported); teachers (in those states in which part of lottery revenues is earmarked for education); state legislators (who quickly grow accustomed to the extra revenue); and the media and advertising industry (which benefit enormously from the publicity and commercialization of the lottery).

Lotteries have developed because people like to gamble and there is an inextricable human impulse that makes them attractive. But, beyond that, they have evolved because of their success in raising large amounts of money. As a result, they have created enormous dependency on revenues and, in doing so, they are running at cross-purposes with the broader public interest.

Historically, state lotteries have been essentially traditional raffles, in which the public buys tickets for a drawing to be held at some future date, weeks or even months away. But, beginning in the 1970s, innovations in lottery games radically transformed the industry and radically changed the nature of the public’s relationship to it. As a result, the number of tickets sold grew rapidly and revenue growth has been steady since. However, the public has gotten bored with the old raffles and new games must be introduced constantly to maintain or increase revenues. This has created another set of problems, including the proliferation of “lottery-related” mental disorders. This article examines the current state of lottery regulation and offers some suggestions for reform.