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Lotteries and the State

Debates are ongoing now in several other states about whether or not to institute a lottery.

  • Timothy D. Terrell,
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Thirty-seven states, as well as Puerto Rico and Washington, DC, use lotteries to raise funds, often for education. Debates are ongoing now in several other states about whether or not to institute a lottery. As Christians participate in these discussions, there are several critical questions we should ask. First, are lotteries immoral? If so, why? Second, do state education lotteries provide the benefits to education that are commonly advertised? Can private education be harmed by a lottery? Third, can we justify setting the state up in the entertainment business as a competitor with the private sector?

The Moral Problem with Lotteries
Lotteries, at their root, amount to an exchange of a dollar for an expected return of somewhat less than a dollar. Many people find this exciting and therefore entertaining. We cannot say that lotteries are wrong because they are entertaining, nor can we say that they are wrong because they involve taking a risk. There is nothing sinful per se about entertainment, and living a godly life will require taking risks. We cannot even say that lotteries are wrong because the player is likely to wind up poorer, for there are many entertaining activities that cost money. Lotteries are morally questionable because players are deriving entertainment from that which ought to have no entertainment value. Someone who receives pleasure merely from exchanging the certain for the uncertain is in the same category as one who laughs at illness or death. Lotteries are entertainment for people who enjoy risk and uncertainty for their own sakes. The Bible encourages avoidance of risk (Ecclesiastes 11:1, 2), not reveling in it.

The motivation of some lottery ticket buyers may be the prospect of "getting rich quick." It should be abundantly clear that, while a handful of players will win large sums of money, the vast majority of players are simply impoverishing themselves by the amount of money they spent on tickets. Most state lotteries pay out about 50 percent of their revenues in prizes — meaning that the average lottery player can expect to receive 50 cents for every dollar spent on tickets. Playing the lottery is a faster road to poverty than to wealth. As Proverbs 28:22 says, "A man with an evil eye hastens after riches, And does not consider that poverty will come upon him."

The Westminster Larger Catechism recognizes this. In answer to question 142: "What are the sins forbidden in the eighth commandment?" the catechism condemns "prodigality, wasteful gaming, and all other ways whereby we do unduly prejudice our own outward estate…." Lotteries are a wasteful use of the resources entrusted to us, and constitute poor stewardship. Churches, Christian schools, and other Christian organizations that use raffles to raise funds are teaching their members and patrons prodigality by example, and are compromising their ability to oppose lotteries in the public arena.

Education Lotteries
Taking the profits from such an activity and devoting them to a "good cause," like education, does not sanctify the activity. Yet advertising a lottery as providing benefits to education sometimes combines "wasteful gaming" with deception. In some states, the government provides money to schools through a lottery and reduces regular budget funding. A 1995 study that examined seven state lotteries found that, in four of those states, there was a decline in education spending after the introduction of the lottery.

Furthermore, even when a lottery does provide substantial additional funds to public schools, this is not necessarily the same thing as benefiting education. Any program that puts more education dollars in the hands of the state relative to private or home schools is potentially harmful to educational outcomes. The state has proven itself to be a poor educator time and again. There is no effective way around this consequence. If state schools receive larger budgets from lottery revenues, that simply means that private schools are going to have a more difficult time competing with public institutions for teachers and staff. At the college level, the proportion of costs covered by government funds (including lottery revenues) increases, and tuition declines relative to private colleges. This price difference makes it more difficult for private colleges to attract students. If the revenues are "shared" through scholarships or vouchers that go to public and private school students alike, the state maintains some level of control by determining the qualifications for the scholarships and the conditions a school receiving those scholarships must meet. These controls are not, and cannot be, truly religiously neutral. The statist religion gains ascendancy with each education dollar that passes through the state's hands.

One concern of some lottery opponents has been the significant fluctuations in lottery revenues over time. Sometimes a lottery that starts off producing large amounts of money for education falters after a year or two, leaving the now-dependent school system without funds to maintain the new spending habits. In Oklahoma, where the governor-elect (a Baptist deacon) is pro-lottery, the answer to this objection has been to put lottery profits into a trust fund to be maintained by public officials. One might ask: Is this going to be a trust fund like Social Security, which is routinely raided by politicians for other purposes?

The State as Bookie
Perhaps more worrisome than the impact on education is the fact that a state lottery sets the state up in an industry that should be left entirely to the private sector. Whether it is lotteries, horse racing, or amusement parks; whether it be sordid or saintly in nature; providing entertainment is outside the legitimate functions of civil government. Romans 13 describes the state as a minister of justice — and by logical extension, defense. Setting up a state-run business of any type simply to gain funds for state activities puts the state into an inappropriate role.

A practical problem with allowing the state into this industry is that it necessarily places the state in direct competition with private businesses. In order for the state to sustain large profits of 20 to 35 percent, private lotteries have to be either illegal or severely constrained. More broadly, other firms in the entertainment industry suffer as dollars that would have come their way flow instead into the state's coffers. The system of free enterprise is damaged whenever the state competes with the private sector.

Christians who enter into the lottery debate should develop logical, biblical underpinnings for their case. There is much to be done in this area, and as Christians develop sound arguments on this issue, we can expect to have a measurable influence on society.

  • Timothy D. Terrell

Timothy Terrell is associate professor of economics at Wofford College in Spartanburg, South Carolina. He is assistant editor of the Quarterly Journal of Austrian Economics and is an Associated Scholar with the Mises Institute.

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