The lottery is a form of gambling where participants pay a small sum of money for the chance to win a large amount of money. Some states regulate lotteries while others do not. Some people play for financial gain, while others participate because of entertainment value. Many states use the proceeds of their lotteries to fund government programs. Some critics of the lottery argue that it is addictive and a waste of public funds. Others argue that it is a useful tool for funding government projects and that it is a legitimate way to distribute wealth.

The earliest known lottery dates from the Roman Empire, where the drawing of lots to determine property rights and other privileges was common. The lottery became a major fundraising device during the American Revolution, when Benjamin Franklin organized several lotteries to raise money for cannons and George Washington promoted a “Mountain Road Lottery” in 1768 that advertised land and slaves as prizes.

During the 1980s, twelve states established lotteries, including New York. These lotteries were primarily a means of raising funds for state projects without increasing taxes, and they proved to be extremely popular. As of June 2006, lotteries raised $17.1 billion and distributed almost $28.4 billion to various beneficiaries (see Table 7.1).

Cook and Clotfelter report that lottery sales are highly concentrated among low-income individuals. They also note that lotteries are disproportionately located in neighborhoods associated with lower income residents, suggesting that the lottery is being used as a subsidy for poor people. However, the authors suggest that it would be unwise for lotteries to market to poor people because they may become addicted to the game and spend more than they can afford to lose.