The Hidden Costs of a Lottery
A lottery is a contest based on chance in which numbers are drawn at random and winners receive prizes. Usually, state governments organize these competitions to raise money for themselves or charities. The word lottery is derived from the Latin word loteria, meaning “to draw lots.”
People in the US spent upward of $100 billion on lottery tickets in 2021—making it the country’s most popular form of gambling. And yet, the public seems to be largely unaware of the cost of these games. When state legislators discuss the benefits of their lotteries, they usually point to revenue—it’s not a big waste of money, after all, if you buy a ticket at the gas station, you are actually saving the children.
What’s less discussed is how that revenue is distributed, and the impact on overall state budgets. In addition, many of the same players who spend money on lottery tickets often spend a lot more on other forms of gambling. It’s not a coincidence that state lottery revenues have gone up significantly in tandem with the growth of casino gambling and sports betting.
State lawmakers enacted lotteries in the immediate post-World War II period under the false belief that they could make up for their reliance on high taxes and social safety net programs by raising revenue through the sale of tickets. But they’ve created a vicious cycle of enticing more people to gamble, making states even more dependent on gambling for their income, and creating new generations of gamblers.
When we talk about a lottery, it’s easy to assume that everyone knows the odds are long and they don’t care—that they’re just playing for entertainment and the chance at an amazing prize. And in fact, if you talk to lottery players, they do know the odds are bad—many of them have elaborate quote-unquote systems for buying their tickets at lucky stores and at certain times of day, for example. And they’ve been playing for years, spending $50 or $100 a week.
Nonetheless, many of them do feel that they’re doing their civic duty to support the state by purchasing tickets—which isn’t necessarily a bad thing if the combined utility from monetary and non-monetary gain is high enough. That’s why it’s important to consider these issues if you’re thinking about joining the lottery or just trying to understand the motivations of those who do play.