As of 2021, Americans spent more than $100 billion on lottery tickets, making it the most popular form of gambling in our country. Lottery prizes are often astronomically large, creating the allure of instant riches for anyone who can buy a ticket. But what are the costs of these games—and is it worth it for states to promote them?
Lotteries have a long history, extending as far back as the Old Testament. Moses was instructed to distribute land by lot, and Roman emperors used them to give away slaves and property. When they came to the United States, people were more skeptical of their value and many were against them altogether. But once the first state-sponsored lotteries opened, they quickly became a fixture of American life.
In general, state-sponsored lotteries follow similar patterns: the government legislates a monopoly; establishes an agency or public corporation to run the lottery; begins with a modest number of relatively simple games; and then, due to pressure for additional revenue, progressively expands the range of offerings. Despite these commonalities, there are also significant differences between state lotteries: the amount of money spent by each participant; the average prize amount per ticket sold; and the percentage of total prizes that are paid out to winners.
State officials argue that lotteries are a useful source of “painless” revenue: that is, the proceeds from the sale of lottery tickets are not subject to income or sales tax and they provide a means for state governments to raise funds for a wide range of purposes. These arguments are generally accepted by politicians and the public, although concerns about lottery profits for compulsive gamblers and regressive impacts on lower-income groups are occasionally raised.
When promoting their lotteries, state officials spend billions in advertising dollars to convince the public that playing the lottery is not only safe and fun but is actually a good way to invest in one’s future. This may be a shrewd strategy for the government, but it’s also a poor one for the average lottery player: Every time someone buys a ticket, that person is spending money they could have saved for retirement or college tuition.
The odds of winning the lottery are incredibly slim, but players do not necessarily perceive this to be a drawback. There is a widespread belief that your chances of winning the lottery increase the longer you play, but in reality, this is not true. In fact, there is no such thing as a lucky number, and any set of numbers is just as likely to win as any other.
What’s more, lottery players as a group tend to be more heavily concentrated in middle-income neighborhoods than the general population, and are less likely to be wealthy or educated. The result is that lottery play can actually have the effect of increasing inequality: foregone savings that could have gone to help families escape poverty are instead spent on a ticket with a tiny chance of changing someone’s fortune.