The casting of lots for deciding fates or allocating wealth has an ancient record. The first recorded public lottery was held during the reign of Augustus Caesar for municipal repairs in Rome. The first lotteries to distribute prizes in the form of cash were organized in the Low Countries in the 15th century. These early public lotteries were often used to raise money for town fortifications and to help the poor.

Since the mid-1970s, however, many states have introduced state-run lotteries. Lotteries have generated enormous revenues that are used to finance a wide variety of state programs. The growth in revenues initially stimulates a dramatic expansion in the number of games and the amount of prize money offered, but then the growth tends to level off and even decline. This decline has spurred the introduction of new games and increased efforts at advertising.

State lotteries are run as businesses with a primary objective of maximizing revenues, and their advertising necessarily focuses on persuading potential customers to spend money on the games. As such, they operate at cross-purposes with the overall public interest. Does this arrangement lead to compulsive gambling or regressive taxes on lower-income people? If so, can such problems be managed?