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Wyoming residents no longer have to cross the border to purchase Powerball tickets. On Aug. 24, Wyoming became the 44th state to legalize a lottery. Proponents laud these games as an easy source of funds for schools and other public services. However, lotteries are often a bad bet: Revenues are relatively modest but their problems can be large.
New Hampshire established the first state lottery in 1964, and the games soon spread throughout the Northeast. By 1978, every state between Maryland and Maine had a lottery. In the 1980s, lotteries went West, as 18 more states, from Virginia to California, authorized lotteries. Most holdouts were in the South, but three Southern states authorized lotteries in the 1990s, and five more in the 2000s. Today, only six states have no lottery—Nevada, Utah, Mississippi, Alabama, Alaska, and Hawaii (see map).
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Lottery legalization is driven by two related arguments. First, supporters argue that if a state’s residents are going to play the numbers somewhere then they ought to play in “our” state. Wyoming Gov. Matt Mead promised his state’s games would "keep Wyoming dollars in Wyoming." Second, proponents claim lotteries will generate revenue windfalls for starved public services like education. During North Carolina’s legislative debate, pro-lottery groups argued a lottery would fund new school construction.
Twenty-four of the 43 states with lotteries have dedicated most of their cumulative lottery revenues to education, and, of those, 14 have earmarked 100 percent. These revenues either support elementary and secondary education, a college scholarship fund, or a mix of both. Some states explicitly cite education benefits in slogans marketing their lotteries:
- Ohio: Take a chance on education. Odds are, you'll have fun!
- New York: Raising Billions to Educate Millions
- South Carolina: Big Fun, Bright Futures