The Costs of Playing the Lottery

In the United States, people spend billions of dollars on lottery tickets each year, and while there are many who play purely for the entertainment value, some believe that winning is their ticket to a better life. The odds of winning are slim, but so are the costs associated with playing. Many of those who do win are left worse off than they were before their victory, as evidenced by the fact that a large percentage of lottery winners end up filing for bankruptcy within a few years.

Until the nineteenth century, public lotteries were common in Europe and the United States, both as means of raising money for public ventures and as instruments of governmental coercion. In colonial America, lotteries were often used to raise funds for both private and public purposes, financing the foundation of Harvard, Dartmouth, and Yale, as well as roads, canals, and bridges. The Continental Congress even attempted to hold a lottery to raise funds for the American Revolution, which was ultimately abandoned. Privately organized lotteries were also popular, and prizes included everything from dinnerware to land.

Modern advocates of lotteries argued that since gamblers were going to bet anyway, government might as well make some of the profits. They dismissed longstanding ethical objections to gambling and claimed that state-run lotteries would bring in enormous sums of money without forcing governments to raise taxes. This seemed to be a great solution for politicians facing budget crises, as it freed them from having to face the public or their constituents about the prospect of higher taxes.

Lottery sales soared during the nineteen seventies and eighties, as incomes fell, job security eroded, health-care costs exploded, and the longstanding national promise that hard work would leave every generation wealthier than the previous one ceased to be true. The obsession with unimaginable wealth, embodied in the fantasy of a multimillion-dollar jackpot, only made these trends worse.

Rich people do buy lottery tickets, of course; on average they spend one per cent of their annual income on them. But because they purchase fewer tickets than do the poor (except when the jackpots are very high), the wealthy don’t drive lottery sales as much as the poor do. To keep sales up, prize caps and the number of numbers in a given drawing were raised, making the odds of winning smaller and smaller.

In short, the same forces that made a lottery possible in the first place also drove it to be an enormously expensive form of public gambling. As a result, the lottery is regressive and should be examined more closely. Until we do, it will continue to finance government services that people would rather pay for through taxes or user fees. That is, of course, unless the lottery becomes just another form of state-sanctioned slavery. That, too, might be a worthy goal. For more on this topic, read the full piece.