The lottery is a fixture in American society. Its players spend billions of dollars each year in hopes that they’ll win the big jackpot. But just how meaningful that revenue is in broader state budgets — and whether it’s worth the trade-offs to people who lose money in the process — merits close scrutiny.
The first recorded lotteries were held in the Low Countries in the 15th century, for purposes such as raising funds for town fortifications or to help poor citizens. In colonial America, they played an essential role in financing private and public projects, including churches, colleges, canals, bridges, roads, ports, and even militias fighting the British during the American Revolution.
In the nineteenth and twentieth centuries, state lotteries were a crucial source of revenue to help states expand their range of social services without especially burdensome taxes on middle-class and working-class citizens. But in the era after World War II, those arrangements began to break down as inflation and rising health-care costs put a strain on state budgets.
As a result, legalization advocates no longer pitched the lottery as a silver bullet that would float most state budgets. Instead, they started to argue that a single line item (typically education or elder care) could be paid for using the proceeds of the game. This approach made it easier to convince voters that a vote for the lottery was not a vote against government.
Despite the fact that the odds of winning are very low, lotteries have continued to prosper and grow in popularity. Some researchers suggest that this is a result of the psychological effects of chance, or an allure of unimaginable wealth. But Cohen writes that this fixation on improbable riches also coincided with a decline in financial security for most Americans, as income inequality widened, job security and pensions were cut back, unemployment rates rose, and health-care costs soared. Essentially, life imitated the lottery, and most of us lost.
While many states offer a variety of games, most of them are based on picking the right numbers from a set of numbers, with different prize amounts depending on how many correctly picked numbers are drawn. In the United States, there are more than 50 state-run lotteries that each sell more than 100 million tickets per week.
In addition to traditional games with a random drawing of numbers, some states offer instant-win scratch-off tickets and daily number games that require players to choose specific numbers. A few states even sell lottery-style games over the internet. Although lottery revenues increase dramatically after a new game is introduced, they eventually level off or even decline, requiring the introduction of a steady stream of games to maintain or increase sales. In addition, certain socio-economic groups are more likely to play the lottery than others. For example, men play more often than women, blacks and Hispanics more than whites, and the young and old less than those in the middle age ranges.