America is a curious patchwork of state and multi-state lottery gambling rules and regulations. Every state has jurisdiction over lottery gambling laws as prescribed in its constitution. You might think that a state lottery is a given – but you’d be wrong! In fact, it is currently prohibited in 5 states: Alabama, Alaska, Hawaii, Nevada, and Utah. Even when available, most lottery purchases are limited to brick-and-mortar retail establishments, like your local 7-Eleven, grocer, or pharmacy.
It was estimated that US lottery sales reached $89.65 billion in 2020, making them a sorely-needed source of revenue for cash-strapped states. Gambling wins of $5,000+ are subject to a 24% federal withholding tax, while each state sets its own tax rate. Online sales only represent a small portion of overall ticket sales since states have yet to embrace it. This seems a lost opportunity, given the growth in online competitors offering alternatives like fantasy sports contests, casino games, and sports betting.