Not worded well, admittedly, but IMO removing "already-taxed" from the parent doesn't change the original point. The government has a conflict of interest here

Not worded well, admittedly, but IMO removing "already-taxed" from the parent doesn't change the original point. The government has a conflict of interest here: it benefits tremendously from direct profits and the top-marginal-rate income tax assessed on winnings, but at the same time causes damage to public health via addiction, poverty, bankruptcy, and foreclosure. There is no useful real-world activity associated with the prize money itself: you're collecting peoples' money and giving it back to someone, then collecting income tax on that amount. Lottery profits beyond that are often promised to schools or public works projects (which would be economically useful), but that money is often redirected elsewhere [1]. Lotteries are marketed aggressively, often with depictions and/or anecdotes about what you'll get to do with the winnings. Some lotteries go as far as installing games in grocery stores. Odds of winning are almost always buried in fine print or glossed over. Lotteries are disproportionately played by the poor. In some lotteries, 80% of sales come from 10-15% of the players [2]. Why /should/ this exist? [1] https://www.washingtonpost.com/blogs/answer-sheet/post/mega-millions-do-lotteries-really-benefit-public-schools/2012/03/30/gIQAbTUNlS_blog.html https://www.washingtonpost.com/blogs/answer-sheet/post/mega-... [2] http://www.nytimes.com/2007/10/07/business/07lotto.html?pagewanted=3 http://www.nytimes.com/2007/10/07/business/07lotto.html?page...