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Lotteries are a popular source of public revenue. In the United States, 40 states and the District of Columbia allow them, raising a considerable amount of money for everything from education to road construction. But many people have a hard time understanding how the lottery works and how much it can cost.

In the days when America was young, states often looked to lotteries as a way to finance needed projects without raising taxes. In a country defined by its aversion to taxation, Cohen writes, “lotteries seemed to offer the chance for governments to make revenue appear seemingly out of thin air.”

But even in early times, critics of state-sanctioned gambling were aplenty. They questioned both the morality of using public funds to fund government services and the amount that states really stood to gain from lotteries. In addition to detractors from all ideological corners, many were devout Protestants who viewed gambling as a sin.

Today, a large share of lotteries in the developed world are run by state agencies. A common feature of these lotteries is that they pool all stakes placed, then distribute a percentage as revenues and profits to the organizers and a larger portion as prizes to the players. A percentage of the total pool also goes toward administrative costs.