How State Lotteries Developed and How They Influenced the Economy

You might take lotteries for granted in the many US states where they are legal, but have you ever stopped to wonder how much money they generate and how those funds contribute to local economies? 

Before we examine how state lotteries have influenced the economy, let’s first look at how the lotteries developed.

An Overview of State Lotteries’ History

Lotteries in the USA began back in the colonial era – not only as a form of entertainment but also as a way of generating revenue for the colonies. However, by the 1830s, evangelical reformers started objecting to lotteries for moral reasons, and by 1890, lotteries were banned everywhere except for Louisiana and Delaware.

It was not until 1934 that the first modern lottery operated by the government was launched, in Puerto Rico. That was followed, almost three decades later, by New Hampshire’s lottery in 1964.

Emboldened by New Hampshire’s success and high amount of revenue, other states began to follow suit. 

For instance, New York caught on in 1967 with its own lottery game. And in the 1970s, other states jumped onto the bandwagon, including New Jersey in 1970, Michigan in 1972, and Ohio in 1974. Also, scratch cards were first launched in the 1970s, which became a major source of income from state lottery revenue.

This chain reaction kept rolling well into the 1980s and 1990s when waves of states launched their lotteries. And it was in 1985 when the very first national multi-state lottery game was formed.

Today, lotteries are established in 45 states throughout the U.S.

How State Lotteries Have Influenced the Economy

According to the latest statistics from Statista, state and local lotteries that are operated by the government (such as Powerball and Mega Millions) generated approximately $31.22 billion in 2021!

Do not underestimate just how much that revenue has helped each state that runs lotteries. The funds are used for things like state public education and infrastructure programs.

Let’s find out more about how state lotteries influence the economy.

They Are Budget Boosters

In some states, the lottery is basically King Midas, touching—and turning into gold—various budget lines that would be gasping for air otherwise. For example, back in 2009, 11 states saw their lottery winnings outpace what they banked from corporate income taxes.

State Lotteries Cause Economic Ripple Effects

Lotteries are not just about giving you that fleeting dream to swap your cubicle for a cabana. They grease the wheels of local businesses too! Picture this: A corner store sells a winning ticket and suddenly it is swarmed like it is giving away free money (which, technically, it did). The buzz can boost sales—it is essentially low-key advertising that does not cost them a dime.

Critique Corner

Now hold up. Before we all ride off into the sunset with our lottery tickets clutched close, let’s chew over some pushback. There can be good and bad sides to lotteries. For instance, they face heat for creating a “regressive tax” – that is fancy lingo for leaning heavily on folks who might not be rolling in dough. 

However, seeing as lotteries bring in such high levels of income that states can use for the public good – the benefits of state lotteries arguably outweigh the drawbacks.

The Benefits That State Lotteries Bring to Players

Jumping into the lottery fray is not just about chasing that elusive millionaire status. For players, it can be a fun activity that brings a break from the daily grind and enables them to daydream about living large.

Furthermore, with modern technologies like lottery ticket scanners, it is easier than ever before for people to track lottery results and spending. For instance, with the LotteryCurrent app, people can quickly scan a lottery ticket from any state and also keep track of how much they spend.

The Takeaway

Ultimately, state lotteries have enabled local governments to access more funding to plow back into the local economy – to help support things like infrastructure and education.

So, lotteries can benefit everyone – not just those who are lucky enough to win big.