Unlike many public policy issues, where the debate centers on the merits or otherwise of the issue itself, lotteries generate intense debate not about their desirability but about specific features of their operations. In general, these include their impact on the poor and compulsive gamblers, their regressive nature on lower-income neighborhoods, and whether state governments should promote gambling.

Lotteries typically involve a pool of money that pays out prizes (of various amounts) to a number of people who have paid for the opportunity to win. The prize money is usually predetermined, and winners can choose to receive a one-time payment or an annuity. Winnings are often subject to income tax. In the United States, winnings are often taxable as capital gains rather than ordinary wages or income.

When lotteries are run as businesses aiming to maximize revenues, the promotion of them necessarily focuses on persuading target groups to spend their money on the tickets. But such a message runs counter to the idea that lotteries should be considered public service activities.

In addition, the way in which lotteries are promoted can reinforce stereotypes about what it means to be poor. Clotfelter and Cook point out that the majority of lotto players come from middle-income neighborhoods and that they tend to spend a proportionately large amount of their incomes on lottery tickets. Moreover, the way in which lottery promotions often present the games as fun and a bit surreal obscures the fact that they are very much like gambling and can have negative consequences for lower-income families.