The Dangers of Lottery Taxes


Lottery is a popular form of gambling in which people buy tickets for chances to win a prize. The prizes can be anything from money to goods. A lottery is usually run by a state or a private company. People can also play a lottery online.

The first European public lotteries started in the 16th century, when towns began holding them to raise funds for things like fortifications and relief for the poor. These were hailed as a painless form of taxation.

In the early post-World War II era, governments were looking to increase their array of services without raising taxes on the middle class and working classes. They saw lotteries as a way to bring in more revenue without the onerous burden of sin taxes on cigarettes, alcohol and gambling.

But it is a dangerous proposition to promote an activity that can lead to serious addiction, especially when the regressive nature of its effect on society is taken into consideration. Those who buy lottery tickets are disproportionately lower-income, less educated and nonwhite. They spend a hefty share of their incomes on tickets.

It is not unreasonable to assume that the government should not be in the business of promoting an addictive vice. But it may be a mistake to think that replacing taxes with lottery revenues will not create its own problems.