The Troubled Underbelly of the Lottery

A lottery is a form of gambling whereby numbers are drawn at random for a prize. The prize money may be cash or goods. In some countries and states lotteries are outlawed, while others endorse them to a limited extent by organizing state or national games or by licensing private companies to conduct them. Most governments regulate the prize amounts and the distribution of tickets. A lottery is also a popular method of raising funds for public purposes, such as education or public welfare.

The casting of lots to determine fates and destinies has a long history, as illustrated by the numerous references to the lottery in the Bible. In the modern sense of the word, however, the term refers to a government-sponsored competition based on chance in which numbered tickets are sold for a prize. Most state lotteries are operated by a public agency and begin operations with a modest number of relatively simple games. As demand grows, they progressively expand the number and variety of games offered.

State lotteries are a major source of revenue for most state governments. The vast majority of proceeds are earmarked for specific institutions, primarily public school systems. In addition to generating significant revenue, they have a powerful marketing campaign that aims to elicit the highest possible level of participation by promoting dazzling jackpots and encouraging the belief that a single ticket could be your lucky day.

While the success of lotteries has been impressive, there is a troubling underbelly to the exercise: people know that they are not likely to win. Nevertheless, they continue to play, and they do so in part because of the deep-rooted human impulse to gamble. This tendency, which is manifested by the many billboards on highways that advertise the Mega Millions and Powerball jackpots, is reinforced by the fact that, in this age of inequality and limited social mobility, the lottery offers an unreachable but tantalizing promise of instant riches.

The message that lottery marketers are sending is confusing. They tell us that we should buy a ticket because it’s fun and it helps the kids or whatever. But they never put this in the context of overall state revenues. It’s the kind of message that obscures how much money people spend and makes it hard to understand how regressive these lotteries are. The truth is that people spend a large fraction of their incomes on tickets and often do so because they believe that the odds are in their favor, despite all evidence to the contrary. To make matters worse, they often have quote-unquote systems for buying their tickets and selecting numbers that are not borne out by statistical reasoning. It’s a lot like betting on a sports team, only with more money at risk. And when you lose, it can be devastating. A recent study showed that a single lottery loss can depress income for an entire year. This is a remarkably powerful force in the lives of many low-income people and must be recognized and addressed.