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Cohen writes that America’s lottery history has been shaped by political exigency: the nation was short of revenue and long on infrastructure needs, but it was also “defined politically by an intense aversion to taxes.” Lotteries offered states a way to maintain services without hiking tax rates, and, as they gained popularity during the late twentieth century, they seemed like budgetary miracles, the chance for states to magically create money out of thin air.
But even if the amount of money raised by lotteries does seem impressive, that figure is misleading. It doesn’t include sales or income taxes, and it ends up being a drop in the bucket compared with total state government revenues: by some estimates, only 1 to 2 percent. And that’s before you factor in how much money players spend on their tickets, which is why the question of whether state lotteries are worth it deserves more scrutiny.