The Economics of Gambling
State Lotteries in India
How some Indian states like Kerala, Punjab and Sikkim run lotteries to raise revenue, why lotteries are called a regressive tax, and the Lotteries (Regulation) Act of 1998.
Some Indian states run lotteries.
Legal framework
- The Lotteries (Regulation) Act, 1998 lets states organise or ban lotteries.
- States like Kerala, Punjab, West Bengal, Sikkim and others run them; many states ban them.
Kerala
Kerala’s state lottery, started in 1967, earns significant revenue and employs thousands of ticket sellers, often disabled or elderly people.
Revenue
Lotteries raise money for state budgets and welfare.
Regressive tax
Poorer people spend a larger share of income on tickets, so lotteries act like a regressive tax.
Payout
Only part of ticket sales returns as prizes; the rest goes to the state and sellers.
Bumper draws
Big festival draws like Kerala’s Onam Bumper attract huge sales.
Millions of tickets sell for Kerala's Onam Bumper, with a top prize of several crore rupees.
They take a larger share from poorer players.
- States can run or ban lotteries under the 1998 Act.
- Kerala's lottery began in 1967.
- Lotteries raise state revenue.
- They act like a regressive tax.
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