The lottery was introduced in America in 1967 by the state of New York. The New York lottery was a success, grossing $53.6 million in its first year. It was so popular, in fact, that neighboring states began to establish their own lotteries. By the end of the decade, twelve states had lottery laws. The lottery was an effective way to fund public projects without raising taxes. It also attracted Catholic populations, who were generally more tolerant of gambling activities.
Since 1890, Colorado, Florida, Idaho, Kansas, Missouri, Oklahoma, Oregon, South Dakota, and Virginia have all introduced lottery games. Those states that have not yet adopted lottery games were also noted for having negative results. The most significant decline was reported in Delaware, where sales decreased 6.8% in 2003. Other states, like West Virginia and Puerto Rico, saw increases of 27.5% and 23.1%, respectively. Some states have adapted the lottery and are experimenting with new ways to promote responsible play.
According to a survey, lottery participation rates are similar across ethnic and income groups. African-Americans, for example, are more likely to play the lottery than any other group, with the exception of whites. Also, respondents without a high school diploma and low-income households spend more on the lottery than any other group. Overall, lottery participation rates are higher among people aged 45 to 64 and among those with no college education. And though lottery payouts are not rosy for everyone, they remain relatively low.
In 1999, the Gallup Organization surveyed a national sample of Americans about the use of lottery proceeds. The study found that over 65 percent of respondents were more likely to play the lottery if the proceeds of winning the lottery went to a specific cause. Other concerns were underage gambling and too much advertising. While many of these concerns are valid, the survey also revealed that the lottery continues to be a popular and widely-played activity among middle-class, high-income men.
In 2003, the number of state-run lotteries reached eighty-six thousand. The majority of these retailers are state-run, with the exception of four states with quasi-government lottery corporations. All of these state-run lotteries use their profits to support government programs. In August 2004, nearly ninety percent of the country’s population lived in a state with a lottery. Anyone who is physically present in the state can purchase a lottery ticket.
In FY 2006, the state-run lottery distributed $17.1 billion to different beneficiaries. Each state allocated lottery profits in different ways. As table 7.2 shows, since 1967, more than $234.1 billion has been distributed to various beneficiaries. Among them, the top prize was thirty billion dollars in New York. The second-highest prize was sixty trips to Las Vegas, where each winner received $500 in spending money. Moreover, winning tickets usually came with a mandatory payment of federal and state income taxes.
The NGISC report did not provide any evidence that lotteries target the poor. In fact, marketing to low-income neighborhoods would be unwise, both politically and economically. Additionally, people often buy lottery tickets outside of the neighborhoods where they live. Many people who live in higher-income neighborhoods pass by low-income areas while shopping or working. Furthermore, they are surrounded by fewer lottery outlets and gas stations. They are thus less likely to win the lottery.