State lotteries have become nearly ubiquitous throughout the country. Forty four states plus the District of Columbia, Puerto Rico, and the U.S. Virgin Islands permit lotteries. In virtually all states with lotteries, the stated purpose is to raise revenue.
State-run lotteries can raise quite a bit of revenue in those states which allow them, often for a specific beneficiary (such as K-12 education). Lotteries often include a combination of scratch-off tickets and number-picking games with sizable cash prizes. Imagine smiling Powerball winners displaying $20 million checks for the at-home viewing audience.
However, there is wide diversity in how the money raised is actually distributed. Most states designate lottery profits for schools and education, several states distribute profit to the general fund, or a fund for economic development, such as highway construction, in support of stadium authorities. A few states designate lottery revenues to fund various general environmental activities.
Examples of How Some States Use Lottery Revenue
Many states apply the revenues to more than one purpose. A few states are quite unique. For example, Pennsylvania uses its revenue for programs designed to help the elderly with rent rebates and property tax assistance. In Massachusetts, a portion of the lottery revenue is used in support of the arts. Two other states, Maryland and Washington, use substantial portions of their lottery revenue to raise money for sports stadium construction and operation.
A number of states have enacted provisions designed to help problem gamblers. In Louisiana, for example, all lottery tickets must be be printed with a toll-free gambler's assistance hotline phone number. On a national level, the National Council on Problem Gambling (NCPG) provides assistance and resources to those with an addiction to gambling.
One interesting provision in many state lottery laws provides for the garnishment of prizes to collect various debts, ranging from unpaid taxes to outstanding child support obligations. Usually, only prizes over a certain amount may be garnished. For example, Texas permits garnishment of prizes won by persons who have defaulted on guaranteed student loans.
Some states have various ways of offering lottery games. Maine, New Hampshire and Vermont all authorize two lotteries: their own and a Tri-State Lotto that is authorized under a tri-state compact. The proceeds are distributed equally among the three states.
It is interesting to note that Nevada does not permit a state lottery. Perhaps this would be seen as competing with the state's massive casino industry.
A Final Word on State Lotteries
Overall, the matter of state lotteries is only one category, albeit a big one, of the laws relating to gambling. The law of gambling is a very complex and varied area of state regulation. Of late, gambling itself has been subject to many political pressures, both for and against its legalization. See State Gambling Laws to learn more.
Note: State laws are constantly changing -- contact a gaming attorney in your state or conduct your own legal research to verify the state law(s) you are researching.
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State Lottery Laws: Related Resources
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