The Dangers of the Lottery

The Dangers of the Lottery


The lottery is the world’s most popular gambling activity. In the United States alone, Americans spend more than $80 billion a year on tickets. The odds of winning are incredibly low, but the payouts can be staggering. Some people choose to take a lump sum, while others opt for an annuity payment that will be paid out over time. This is an important decision that should be made based on your financial goals and applicable rules surrounding the specific lottery.

The first lotteries grew out of the need for town governments to raise funds for wars, public works projects, and charitable relief. In the fourteen-hundreds, towns in the Netherlands began selling numbered receipts, with each ticket representing a stake in a pool of money staking for a prize to be drawn. A bettor wrote his name and the amount he staked on the ticket, then deposited it with the organization running the lottery. The organization then shuffled the tickets and conducted the drawing, with the bettors then learning whether they had won or lost.

Over the centuries, the underlying principles of the lottery have not changed much. Its appeal is a powerful one, as evidenced by the persistence of state-run lotteries and the countless scratch-off games that can be bought from kiosks in grocery stores and gas stations. But the lottery is a dangerous game. It is designed to make bettors think they are in control of their destiny, when in fact the chances of winning are so small that the average winner will go broke within a few years.

Moreover, lottery revenue is regressive, generating far more money from poor than from rich households. According to a study by the consumer finance company Bankrate, players making more than fifty thousand dollars a year spend only one percent of their income on tickets; those earning less than thirty thousand dollars, on the other hand, spend thirteen percent of their income. The difference in purchasing power is even more dramatic when you consider that the poor are more likely to live in areas with heavy advertising for the lottery, and thus have more exposure to its messages.

Lottery supporters point to the fact that a lottery can help balance a state’s budget without raising taxes, which is true. But Cohen points out that this is also the case with many other government activities, including welfare programs. In the nineteen-sixties, with inflation, rising health care costs, and war expenses weighing on state budgets, it became impossible for politicians to maintain services without hiking taxes or cutting services, which would be deeply unpopular with voters. Lotteries seemed like an easy solution.

When states legalized the lottery in the early twentieth century, they marketed it as a statewide silver bullet that would solve all problems. But after the numbers didn’t add up, legalization advocates shifted tactics, Cohen writes. Instead of arguing that a lottery could cover all a state’s budgetary needs, they began to say that it would subsidize a single line item—usually education but occasionally elder care or public parks or aid for veterans. This narrower message was easier to sell, and it allowed lottery proponents to frame a vote for the lottery as a vote for that particular service.