The lottery is the most popular form of gambling in America. And, according to statistics, it’s not just the young and affluent that play—people of all incomes spend money on tickets. State governments promote the lottery as a way to generate revenue that would otherwise be spent on state services. It’s a message that plays well during periods of economic stress, when lawmakers fear tax increases and program cuts. But it’s a message that obscures the regressivity of the lottery and its impact on low-income households.
Lotteries are designed to appeal to people’s fantasies about wealth, and they do so by offering a combination of entertainment value, social status, and the hope that their numbers will come up. As a result, lottery ticket purchases cannot be accounted for by decision models based on expected value maximization. Those who purchase tickets do so because the ticket cost less than the chance to win the jackpot, or because they derive other non-monetary values from the experience of purchasing a lottery ticket.
A number of studies have found that lottery play disproportionately burdens lower-income players. This is because they have lower disposable income and tend to purchase more lottery tickets relative to their disposable incomes. Additionally, they may have a false sense of security that they will never lose the money they have invested in the lottery because “everybody else is doing it.”
Many states rely on two messages to promote their lotteries. First, they tell the public that winning the lottery is a fun and rewarding experience. They also emphasize the amount of money that the state gets from the lottery—a message that masks its regressivity. The second message, which is less visible, suggests that buying a lottery ticket is part of one’s civic duty and a contribution to the common good.
The history of the lottery is long and varied. During the 15th century, towns in the Low Countries held public lotteries to raise funds for town fortifications and to help the poor. In the United States, John Hancock used a lottery to build Boston’s Faneuil Hall, and Benjamin Franklin ran one to raise money for cannons to defend Philadelphia against the British. George Washington also sponsored a lottery, though it was unsuccessful.
When a lottery is introduced in one state, it spreads quickly to bordering areas, and then to other states. This is why we now have Powerball and Mega Millions—multistate lotteries that increase prize pools and draw more players. Lottery proponents point out that lottery proceeds support education and other public goods. But these claims are misleading because lottery revenues have a very small impact on state budgets. And they are dwarfed by other sources of revenue, such as sales taxes and excise taxes. Furthermore, the majority of lottery profits are distributed to winners, who often find themselves worse off than they were before their big win. And, in some cases, winning the lottery has even exacerbated the problems that it was supposed to solve.