When people buy a lottery ticket, they are essentially making an investment. The risk-to-reward ratio is very low, but the total return could be substantial. Lottery winners are often irrational gamblers, chasing their dreams even when they know the odds are against them. Lotteries are a major driver of state government revenue, but they also divert money that people would be saving for retirement or college tuition.
Lotteries are a part of our culture, a ubiquitous form of gambling that has become the most popular in America. In fact, a recent study found that Americans spent over $100 billion on lottery tickets in 2021. State lottery commissions use a variety of tactics to keep people playing, from the look of their advertising to the math behind the tickets. These strategies aren’t that different from those used by tobacco companies or video game manufacturers. And while many people who play the lottery are not addicted, the lure of a big jackpot can be addictive. The lottery is a massively profitable enterprise that’s deeply woven into the fabric of American life.
The history of the lottery is an erratic one, but the modern form began in Europe and has grown rapidly in America. It was a common practice in the Roman Empire, where prizes ranged from food to livestock and even slaves (Nero liked them), and it has been attested to throughout the Bible.
In colonial America, the lottery was a common way to raise money for public works projects, from canals and roads to libraries and colleges. Harvard, Yale, and Princeton were financed with a lottery, and it is likely that the Continental Congress tried to use one to fund the Revolutionary War.
Advocates of the lottery often argue that it will float most state budgets, and indeed, in the past when states have relied on the revenue from the games, it has proven to be a useful source of funds. But over the years, as state budgets have gotten tighter and people’s financial security has eroded, those arguments have lost strength. Advocates have had to gin up other strategies, and lately they’ve started arguing that the revenue from the lottery will cover a particular line item—usually education or elder care—and that voters who support legalization should not be seen as supporting gambling.
But the message that lottery advocates are relying on is flawed and obscures how much people are spending on tickets. They are telling voters that it is a fun thing to do, and they’re trying to convince those who do not want to play the lottery that they are not wacky or weird, all while forgetting that the majority of players are serious gamblers who spend large portions of their incomes on tickets. The regressivity of the lottery is not being fully understood. And that is a problem. The article is part of a special issue on addiction and gambling, which is available here.