State Lottery Regulations and the Lottery Industry


In 1998, the Council of State Governments surveyed lotteries across the country. Most, but not all, were run by state lottery boards. Connecticut, Georgia, Kentucky, and Louisiana, for example, have a quasi-governmental lottery corporation. While the lottery is administered by the state lottery board, enforcement authority usually lies with the state police and attorney general’s office. The amount of oversight given to state lotteries varies widely. Several other factors have a bearing on the effectiveness of lottery regulations.

Regressivity of lottery participation among lower-income people

Lottery research has demonstrated the regressivity of lower-income people’s participation. This effect is particularly pronounced among lower-income people. The reason for this is not entirely clear, but one possibility is that they play the lottery as a means to compensate for their low income. In a recent study, Lang and Omori looked at the characteristics of lottery participants and found that the number of lottery days played per household was greater when the household’s income was lower than the median.

Although lottery play among lower-income households is higher than that of higher-income groups, most research on the topic hasn’t considered this factor. In Australia and the UK, for example, lottery play is more common among low-income households than among higher-income ones. The average number of lottery days played per household is lower among low-income households, and they are also more likely to gamble on other forms of gambling.

Legal minimum age to play

The age to play lottery games is increasing gradually, with the legal minimum age to play the National Lottery expected to be 18 in October 2021. However, there is still concern over the potential impact of the proposed changes on good causes. According to the Gambling Commission, the total returns from sales of tickets to 16-year-olds in 19/20 was c. PS6 million. However, operators of lottery games have agreed that minimum age should be the same across all games.

The law states that gambling is not permitted for those under the age of 18. While gambling activities like casinos and poker have their own minimum age, some have an age limit for pari-mutuel betting, such as the lottery. However, the racecourses of Puerto Rico report that the legal age to play the lottery is 18 years old. This is a good indicator that the minimum age to play lottery games in the US is 18 years old.

Impact of “jackpot fatigue” on sales

It’s easy to see how increasing jackpots could negatively impact lottery sales. Since the coronavirus pandemic hit the U.S., millions of people have been losing interest in winning the jackpot, and the lottery industry is feeling the pinch. In an effort to spur new interest in playing the lottery, Powerball and Mega Millions have introduced changes to the rules. In a bid to prevent “jackpot fatigue,” the new rules will allow the jackpot to rise to $20 million and attract younger players. But if these measures have negative effects, then they may be counterproductive.

The expansion of casinos is already impacting lottery sales. Before casinos, Maryland lottery sales were up for 16 consecutive years. The recent opening of another casino in the state could have been part of the problem, affecting sales of Powerball tickets. A recent study by Maryland’s lottery officials indicated that the new casino may have contributed to the lower sales in September. A state economist commissioned to study lottery sales noted that a casino’s opening has an adverse impact on the lottery industry.

Impact of cutting prize payouts on sales

The net effect of cutting lottery prize payouts depends on the relative magnitudes of the opposing forces. For instance, Mikesell (1994) found that lottery sales were positively correlated with state unemployment rates, increasing 0.17 percent for every one percentage point increase in unemployment. However, Blalock, Just, and Simon (2007) found a negative relationship between per capita sales and unemployment rates, based on aggregate level data from 39 states over 10 years.

While previous research suggests that lottery consumers consider the funds they spend on lottery tickets as part of their overall financial situation, it has not been fully tested. For example, one study found that lottery sales increased in states that earmark part of their lottery revenues for educational purposes. But this increase in lottery sales was not consistent across all states. While earmarking lottery revenue can lead to an increase in sales, it does not account for the propensity of lottery players to buy a lottery ticket.