The Ugly Underbelly of Lotteries

Lotteries are popular because they offer the possibility of winning money or goods with little or no effort. They can also be fun, social, or just a way to pass the time. But they do come with an ugly underbelly. Lotteries dangle the promise of instant riches in an age of inequality and limited upward mobility. And they do so while playing on people’s inherent irrational behavior.

The idea of lotteries dates back centuries. The Old Testament instructed Moses to distribute land by lot, and Roman emperors used them to give away slaves, property, and even public works projects. More recently, states have embraced them as a method for raising revenue. They are one of the few forms of government-sponsored gambling that have consistently gained broad public approval. But the popularity of state lotteries does not seem to be tied to the state’s actual fiscal health: they have won wide support even when the state has no major problems or needs, and the revenue they raise is a small fraction of overall state revenues.

Typically, states legislate to establish their own monopoly; hire a public corporation to run the lottery (as opposed to licensing private firms); begin with a modest number of relatively simple games; and, as they face constant pressure for additional revenues, progressively expand the lottery with new games and advertising campaigns. A common complaint about lottery ads is that they present misleading information on the odds of winning; inflate the value of the jackpot prize (which is paid in annual installments over 20 years, with inflation and taxes dramatically eroding the current value); or encourage people to play for the “chance” of a big payday even though the odds of doing so are very long.

In addition to the regressive nature of state lotteries, they also produce a variety of other problems. First, the irrational impulses that drive people to play lotteries are amplified by the fact that they often do not understand basic mathematical principles such as probability. They believe, for example, that they can increase their chances of winning by purchasing tickets more frequently or by betting more on each drawing. But there is no evidence that these strategies increase their chance of winning.

Another problem is that lottery players contribute billions to government coffers that they could be using to save for retirement or pay their children’s college tuition. They also forgo the opportunity to invest in other types of risky ventures that might yield greater returns. And they may be contributing to the decline of the American middle class. Many of these people can only afford to play the lottery because they lack access to better-paying jobs and have few other options for making money or reducing their debt. And the irrational impulses to gamble can be even more potent when they are combined with a belief that the lottery is the last chance for upward mobility in a country whose economic opportunities are increasingly limited and unequal.