The Main Types of Lottery Games

Before the mid-1970’s state lotteries were little more than traditional raffles, with the public buying tickets for a drawing at some future date, often weeks or months away. The introduction of new types of games has almost entirely displaced the original sweepstakes form of the lottery. Today, states offer five principle types of lotteries: instant games, daily numbers games, lotto, electronic terminals for keno, and video lottery. · Instant games utilize a paper ticket with spaces that can be scratched off, revealing numbers or words indicating whether the ticket wins or loses.
· Daily numbers games allow players to choose their own three or four digit number. Often there are a variety of bets that can accompany these numbers, each with a different probability and a different payout.
· The Lotto allows bettors to choose their own numbers by picking from a large set of possibilities. Drawings of winning numbers take place at regular intervals.
· Video Keno requires bettors to choose a few numbers out of a larger group of numbers, with drawings held quite often, sometimes several times an hour. The payoff is a function of how many numbers the bettor chose, which corresponds to the probability of winning in each case.
· EGD’s require a terminal that can be programmed to carry a wide variety of games, such as video poker. These games offer bettors a chance to play a game and receive immediate payouts for winning bets.5 The Contradictory Role of State Governments The lottery industry stands out in the gambling industry by virtue of several unique features. First, it is the most widespread form of gambling in the United States. It also is the only form of commercial gambling that a majority of adults report having played. Furthermore, the lottery industry is the only form of gambling in the United States that is a virtual government monopoly. State lotteries have the worst odds of any common form of gambling, but promise the greatest potential payoff to the winner in absolute terms, with prizes regularly amounting to tens of millions of dollars. One theme that emerged at the Commission hearings is the contradictory role of state government as an active promoter of lotteries while imposing a heavy “sin” tax on the lottery buyer. According to experts, states have “gone into business selling a popular consumer product, and they have carried on with Madison Avenue gusto and an unfettered dedication to the bottom line. The complete about-face from prohibition to promotion in one state after another is remarkable, to say the least.”6 Lotteries are established and run exclusively by state governments and the government of the District of Columbia. Since the beginning of the wave of lotteries in the 1960’s, state governments have seized on the lottery as a state-operated monopoly. State governments have become dependent on lottery sales as a source of revenue, and have tried to justify the money by earmarking it for good causes, such as education.
The lotteries are used to finance various state programs and services. Of the 38 state lotteries, the revenue from only 10 go into their general funds. Of the remaining states, 16 earmark all or part of the lottery revenues for education, making that the most common use of lottery funds.7 For example, in Georgia lottery money is used for the HOPE Scholarship Program, which provides college scholarships, and for kindergarten education for 65,000 children.8 Georgia also sets aside several hundred thousand dollars of lottery profits for gambling treatment programs.9 Other uses range from the broad (parks and recreation, tax relief, and economic development) to the narrow (Mariner’s Stadium in Washington and police and fireman pensions in Indiana).10