Lotteries are a popular form of legalized gambling in the United States. They are operated by state governments as a way to generate revenue without raising taxes. Proceeds from lottery ticket sales are often allocated to public programs like education, infrastructure, and environmental conservation. While participation is voluntary, lotteries are controversial due to concerns about their fairness and socioeconomic impacts. This article provides an overview of lottery operations in the U.S., examining how many states currently run their own lotteries.
History of State Lotteries
Lotteries have a long history in America, dating back to the colonial era when they were used to help fund infrastructure projects like roads, bridges, and schools. By the early 20th century, nearly all states had banned lotteries due to fraud and corruption. A major turning point came in 1964 when New Hampshire introduced the first modern government-run lottery to generate funds without resorting to tax hikes. This pioneering effort paved the way for other states to follow suit.
By 1975, only 13 states hosted lotteries. But over the next two decades, more and more states came to view lotteries as an attractive revenue-boosting mechanism. Innovations like Powerball and Mega Millions, which are interstate lottery games available across the country, further fueled lottery growth and popularity. By 2000, 37 states plus Washington D.C. offered lotteries. Currently, 44 states and D.C. are lottery jurisdictions. The trend has been toward widespread adoption, though a handful of states still prohibit lotteries on moral or economic grounds.
States with Lotteries
The following 44 states and the District of Columbia currently operate government-run lotteries:
| Arizona | Delaware | Idaho | Kansas | Maryland |
| Arkansas | District of Columbia | Illinois | Kentucky | Massachusetts |
| California | Florida | Indiana | Louisiana | Michigan |
| Colorado | Georgia | Iowa | Maine | Minnesota |
| Connecticut | Hawaii | Kansas | Maryland | Mississippi |
| Delaware | Idaho | Kentucky | Massachusetts | Missouri |
| District of Columbia | Illinois | Louisiana | Michigan | Montana |
| Florida | Indiana | Maine | Minnesota | Nebraska |
| Georgia | Iowa | Maryland | Mississippi | New Hampshire |
| Hawaii | Kansas | Massachusetts | Missouri | New Jersey |
| Idaho | Kentucky | Michigan | Montana | New Mexico |
| Illinois | Louisiana | Minnesota | Nebraska | New York |
| Indiana | Maine | Mississippi | New Hampshire | North Carolina |
| Iowa | Maryland | Missouri | New Jersey | North Dakota |
| Kansas | Massachusetts | Montana | New Mexico | Ohio |
| Kentucky | Michigan | Nebraska | New York | Oklahoma |
| Louisiana | Minnesota | New Hampshire | North Carolina | Oregon |
| Maine | Mississippi | New Jersey | North Dakota | Pennsylvania |
| Maryland | Missouri | New Mexico | Ohio | Rhode Island |
| Massachusetts | Montana | New York | Oklahoma | South Carolina |
| Michigan | Nebraska | North Carolina | Oregon | South Dakota |
| Minnesota | New Hampshire | North Dakota | Pennsylvania | Tennessee |
| Mississippi | New Jersey | Ohio | Rhode Island | Texas |
| Missouri | New Mexico | Oklahoma | South Carolina | Vermont |
| Montana | New York | Oregon | South Dakota | Virginia |
| Nebraska | North Carolina | Pennsylvania | Tennessee | Washington |
| New Hampshire | North Dakota | Rhode Island | Texas | West Virginia |
| New Jersey | Ohio | South Carolina | Vermont | Wisconsin |
| New Mexico | Oklahoma | South Dakota | Virginia | Wyoming |
The most populous states like California, Texas, Florida, New York, and Illinois all operate lotteries, as do mid-sized and smaller states across the U.S. The spread demonstrates that lotteries have broad appeal across diverse geographies and demographics.
States without Lotteries
The minority of 6 states that currently do not have government-run lotteries includes:
| Alabama | Nevada | Utah |
| Alaska | Tennessee | Hawaii |
Alabama and Utah both prohibit lotteries on moral grounds rooted in conservative Christian values. Nevada, the casino capital, views lotteries as competition with its gaming industry. Alaska and Hawaii are geographically isolated. Overall, the trend has been strongly in favor of adopting state lotteries, so this small group may dwindle further if economic factors pressure additional states to expand gambling.
State Lottery Revenues
According to industry data, over $80 billion was spent on lottery tickets in the U.S. in 2019. Lottery ticket sales generated over $22 billion in net revenue for state governments after accounting for prize payouts and administrative costs. The average American spends around $250 annually on lottery tickets.
California generates the highest gross lottery revenue at over $7 billion annually, followed by New York, Florida, Texas, Pennsylvania, Massachusetts, Georgia, Michigan, North Carolina, and New Jersey – all topping $2 billion. However, looked at on a per capita basis, Massachusetts emerges as the highest grossing state. Each adult in Massachusetts spends an average of $763 on lottery tickets every year.
Generally, states with larger populations produce higher total lottery revenues. But other cultural and demographic factors also play a role, demonstrated by high per capita sales in certain states. Lotteries tend to perform well in northeastern states where fewer entertainment alternatives exist. They are typically more popular among lower income groups seeking to improve their economic status.
Allocation of Lottery Revenue
Most states earmark lottery revenue for specific public programs, primarily education. State lotteries allocate funds as follows:
| Education | 64% |
| General fund | 25% |
| Environmental conservation | 5% |
| Capital projects | 3% |
| Economic development | 2% |
| Problem gambling programs | 1% |
While supporting education is often touted as a benefit, critics point out that states sometimes redirect other funding away from schools to compensate when lottery dollars are available. Still, money for education represents the largest allotment. States also rely on lottery funds to cover general expenses. Smaller portions go toward specific causes like environmental protection as well as self-funding elements like economic development and problem gambling initiatives.
State Lotteries: Fairness and Socioeconomic Impacts
State-run lotteries have been controversial since their inception. There are longstanding doubts about the equity of lotteries and their unintended consequences. Key issues in the debate include:
Regressive Taxation
Lotteries have been criticized as an implicit tax on the poor. While lottery participation is voluntary, research shows lower income groups spend a higher percentage of their earnings on lottery tickets. One study found households earning under $40,000 per year in North Carolina spent nearly 4% of their income on the lottery, compared to less than 1% for households above $100,000. This makes lotteries a regressive form of taxation.
Misperception of Winning
Psychologists note that lottery players tend to overestimate their odds of winning and underestimate risks, a tendency known as the “availability heuristic.” For example, high profile jackpot winners receive heavy publicity, making wins seem more common than they really are. In reality, the odds of winning the Powerball jackpot are 1 in 292 million. But ticket buyers may judge the probability higher based on recalling past winners.
Problem Gambling
For a small subset of the population, lottery participation can become addictive and financially devastating, meeting the criteria for problem gambling. One analysis found that lottery players with very low incomes spent about 5% of their money on tickets. Some researchers contend that lotteries draw resources from other types of economic activity with higher utility, essentially wasting a portion of the income of vulnerable households.
Financial Fraud
In rare cases, lotteries have been subject to internal fraud. Infamous cases like the 1980 Pennsylvania Lottery scandal saw fraudulent drawings produce improbable results. Rigged drawings undermine the notion that lotteries are fair games of chance. Strict security protocols help prevent such incidents today. But lotteries must guard against fraudulent activity to maintain credibility.
Earmarking Lottery Funds
There are disputes about whether earmarking lottery revenues truly increases funding for designated programs like education. Critics argue that states relieved of the need to fund schools through their general budget simply allocate that money elsewhere. In this view, lottery dollars for education merely replace other funding, providing no net gain. Defenders counter that lottery profits can only expand education budgets, though impacts remain hard to quantify.
The Future of State Lotteries
State lotteries are firmly entrenched as revenue generators in most of the U.S. and seem likely to maintain their current prominence. A few developing trends could further shape lotteries going forward:
Online Lottery Sales
Digital purchasing of lottery tickets online or via mobile apps is growing rapidly. Online sales offer convenience but also carry risks of underage and excessive gambling. Regulators balance customer service with responsible gambling considerations. A challenge is confirming player identities to prevent fraud. In 2018, just 5 states permitted online lottery sales. That number could reach 20 by 2025 as technology improves security and identity verification.
Privatization
Some states have explored privatizing lottery operations while retaining oversight. Privately run lotteries could enable state governments to secure reliable revenue while transferring administrative burdens to contractors. However, critics see privatization as a slippery slope potentially increasing the focus on profits over public welfare. There are also concerns about transparency with private operators. Still, economic pressures may compel additional states to consider privatized models.
Expansion to New States
A handful of states continue to resist adopting lotteries, but that group seems likely to shrink over time. With most states now reliant on lottery revenue, the desire to remain competitive while offering prohibited gambling options dwindles. For example, a 2021 proposal in Alabama would have authorized a lottery solely to fund college scholarships. While unsuccessful so far, future efforts could finally break down resistance. The trend remains toward near nationwide proliferation of state lotteries.
Conclusion
Lotteries are operated by 44 states and the District of Columbia today, evidence of their widespread appeal as a discretionary form of entertainment and chance for economic gain. State governments have come to rely heavily on lottery revenue to supplement budgets without increasing taxes. Nearly $23 billion was generated in 2019 that states used primarily to support education and general expenses. But lotteries are not without controversy concerning their fairness and social impacts, issues regulators monitor closely. Lotteries seem destined to remain a staple of state economies for the foreseeable future, even as new challenges emerge around digital sales and responsible gambling. Ongoing oversight and adapting to innovations will be critical to enable lotteries to effectively continue generating funds.
