Gambling

No state-sponsored lotteries appeared in the United States until 1964. In that year, conservative New Hampshire adopted a sweepstakes. The state had no sales or income tax, and already derived more than 60 percent of its revenues from "sin taxes" on horse racing, liquor, tobacco, and beer. From the late 1960s onward, most states searched for alternative revenue sources. Gambling became a prime candidate, particularly through the lottery, off-track betting, and casino gambling. Politicians often welcome legal gambling since it does not depend on the coercive power of the state.

Lottery revenues were often referred to as "painless" although legislators recognized that the burden of providing such revenues fell disproportionately upon identifiable income strata. The lottery is usually a regressive source of public revenue since persons who occupy lower-income positions have the most incentive to purchase lottery tickets. Although lottery ticket purchases are voluntary, so is the purchase of most goods and services, which are taxed at a rate considerably lower than the usual percentage that states take before lottery payoffs.

As states compete with one another for the lottery market, novel ways are developed to stimulate demand. States advertise and market lotteries through the following means: frequent drawings; inexpensive tickets; better chances of prize-winning; higher payoff ratios; attractive prizes (including a larger first prize); simpler buying, drawing, and paying procedures; fast notice of results; and the opportunity for players to choose their own ticket numbers. The move from state lottery prohibition to promotion in half a century is remarkable, but not entirely unprecedented given the lottery's fluctuating history of acceptance and rejection in England and the United States.