An analysis of the goals of lottery managers: implications for developments in the operation of Canadian lotteries

Abstract. Government lotteries were introduced in Canada in 1970 and during the past eight years have increased greatly in number and in size. Lotteries have generated a great deal of public interest but the goals of lottery managers have received little attention. The purposes of this paper are to examine some objectives which could be achieved in the operation of lotteries and to use the results of this analysis, along with the experience of foreign lotteries, to make some tentative predictions about changes in Canadian lotteries over the next five years. The first part of the paper discusses the role of government in lottery operation and argues that government‐run lotteries are preferable to privately run lotteries, even if government‐regulated. The second section of the paper examines various goals which may be important to lottery managers and concludes that revenue maximization is likely to be more important than goals like minimizing the regressivity of a lottery ‘tax’ or achieving the price and output which would occur in pure competition. In the last section, suggestions for increasing lottery revenues are examined and it is judged that more frequent draws, special prizes and increased advertising are more likely to occur than changes in ticket prices, prize structures and payout ratios. Lottery profits could also be increased by eliminating the competition between the federal and provincial offerings and it is likely that further conflicts will be resolved by a joint operation or in favour of the provinces.