The Costs of Lottery

Gambling Blog May 9, 2024


Lottery is a game in which numbers are drawn at random for prizes. It is a popular form of gambling, and it has become the most common way that states raise money for things like education. But the lottery isn’t without its costs—most of which come from people losing money.

In the United States, we spend about $100 billion a year on Powerball tickets alone. That amounts to a massive tax on the working class. And yet the lottery is still promoted as a “fun” activity, something to play for a chance at winning big. That message obscures how regressive it is and distracts attention from the fact that lottery revenues make up a significant portion of state budgets.

The earliest lotteries were a simple way to allocate prizes at dinner parties. Each guest would receive a ticket and, after the draw, the winner could choose between different items. Later, the Roman Empire used lotteries to distribute goods, including slaves and land. Europeans continued to hold lotteries in the centuries that followed. In the 17th century, George Washington ran a lottery to finance construction of the Mountain Road in Virginia, and Benjamin Franklin supported one to fund his city’s cannons during the Revolutionary War. By the 1820s, however, negative attitudes about gambling had hardened, and a number of states banned lotteries.

A reversal began in the early twentieth century, and by the end of the decade, lotteries had spread across the country. They were a popular method of raising funds for everything from public works projects to prisons. Today, more than 40 states hold lotteries.

Some states also use the money for education, social services, or health care. Others invest it in public stocks, bonds, or other assets. Still others put the proceeds toward general appropriations or into specific programs such as highway construction. The lottery is often viewed as a painless alternative to higher taxes, especially in states where the middle and working classes pay a higher share of state income taxes.

Most states have laws regulating lotteries, and they delegate the work of running them to a state lottery commission. The commissioner’s job is to select and license retailers, train them in using lottery terminals, promote the games to the public, process winning tickets, pay high-tier prizes, and ensure that retailers and players comply with lottery rules.

Lottery prizes are paid from state revenues, which reduces the percentage available to broader public uses. But because state lotteries don’t appear as direct taxes on working-class citizens, they aren’t usually a subject of public debate. And that’s a problem. The public needs to understand how much money they’re spending on those tickets—and what that means for the rest of us.