States can generate revenue either by becoming the sole producer of a good or service and retaining the monopoly profits as revenue or by taxing goods or services provided by private competitive firms. One such case is the choice between a state monopoly for liquor sales and state taxation of private sellers. Another is the different treatment of lotteries and horse racing. Can you think of any reasons why states decided not to make lotteries legal and to tax the private firms or why states generally decided against state-owned and operated racetracks?