Lottery is a popular pastime that raises billions of dollars for state governments every year. Many players believe it’s a way to improve their financial prospects, while others consider it a good “civic duty.” But how do state officials make money off of all these ticket purchases?

Almost all state-sponsored lotteries follow similar patterns. They establish a monopoly by legislation; hire a public corporation or agency to run them (as opposed to licensing private firms in return for a share of the profits); start small with a modest number of relatively simple games; and, under pressure from the public and other special interests, grow in size and complexity.

Once established, lotteries tend to become very popular and very successful. They also generate intense and often bitter controversy. Criticisms range from the problem of compulsive gamblers to the regressive impact on lower-income groups. These criticisms are both reactions to, and drivers of, the continuing evolution of the industry.

The vast majority of lottery revenues come from people in the middle to upper quintiles of income. The poor, on the other hand, do not play the lottery in large numbers. Those with low incomes simply do not have the discretionary spending power to make large wagers.

While the argument for the lottery is usually that it relieves taxation burdens on working families, critics point out that “earmarking” of lottery proceeds does not free up appropriations from other sources; it simply allows the legislature to reduce by the same amount the appropriations it would have made for a given program without the lottery.