Most States have lotteries, which ostensibly are setup to get additional funds for education, teachers, firemen, roads, parks and other assorted State necessitated expenditures. Whether you are a supporter of lotteries or not, the cat is already out of the bag, so the question then becomes how to maximize revenue and minimize expenses in running State lotteries.
The first problem with lotteries is that they are State run which typically leads to unnecessary personnel, overpaid bureaucrats, inefficiencies, misplaced priorities, mismanagement and the like. There isn't any good reason to assume that the State knows how to best run a lottery and there isn't any reason to expect them to be good at it. There are however, very practical reasons to believe that if the lottery contract was put out to bid, that the response would be excellent, and that the results would overall be quite beneficial to the State.
Many cities and State agencies have already contracted out such items as parking meters, toll bridges, prisons, and roads to private corporations in which these tasks have been competitively bid, audited, and implemented. In most cases, doing so has more efficiently used the taxpayers' dollars while making it easier for State or city budgets to be met; in addition, services are often improved so you then get the dual benefit of both lower costs and better results.
It doesn't take any real stretch of the imagination, to see that the same sort of thinking could be quite beneficial for State run lotteries. Lotteries could be bid in several different ways; for instance, the lottery could be outright subcontracted out to a proven gaming company in return for certain fixed percentages being earmarked for various State programs to be delegated by the representatives of the State. The lottery could also be leased or presold to a private company in which the State receives a large upfront payment and then a certain percentage of residuals over the length of the contract. The bottom line is why should the State be actively involved in the gaming business, when that isn't there raison d'être for being.
States are already beholden to the lottery business to meet certain expenditures for various services so this isn't a game that the State can afford to lose or to misfire on, therefore it is in the States' best interests to explore all avenues that will enhance this money flow. To a large extent, the first State to privatize the lottery will have a major advantage over all the other States, and that is because the shackles will be off, the flow of ideas will be turned on, the deadwood will have been eliminated, and the motivation will be very high.
Ultimately lotteries are a form of taxation and while it may not be the best form of taxation it is at least voluntary in the most meaningful and straightforward sense of the word. In fact, you can make a pretty strong argument that lotteries are a wonderful form of taxation because at least when you willfully spend your money on a lottery ticket there is a chance that you as an individual might receive a large monetary reward, and if not, at least you can take some solace in knowing that the monies that you have contributed will at a minimum go to a good cause.