The lottery is a thriving part of American life, with Americans spending more than $100 billion every year on tickets. State lotteries advertise themselves as a public service, helping to raise revenue for government services while not imposing onerous taxes on the middle class and working poor. But just how much that money actually helps and whether the trade-offs are worth it are matters of opinion.
Lotteries aren’t new, but they’re a lot more entwined in the fabric of American life now than they used to be. The founding fathers, for example, ran lotteries to fund things like Boston’s Faneuil Hall and George Washington’s road across Virginia’s mountain pass. Benjamin Franklin even started a lotto in Philadelphia to help finance his militia.
And the state lottery commission itself has every incentive to tell lottery players and voters all about the good they are doing by raising money for their states. That’s not to say that lottery revenue isn’t important, but it’s also not the only way that the state can raise money. And voters get mad when they see politicians having to go back and increase taxes because the lottery isn’t making enough money for them to be able to afford all of their favorite programs.
There’s a certain inextricable human urge to gamble, and there’s no reason to blame anyone for playing the lottery, just as it would be unfair to blame them for buying an SUV or going out to dinner. But there are a few things about the lottery that should be of concern to people who care about government and how it operates.
1. The odds of winning are extremely low.
The biggest prize in any given lottery drawing is just a few million dollars, but the overall chances of winning are still very small. This is because there are more tickets sold for instant scratch-off games, which attract the most low-income Americans, than for big jackpot drawings like Powerball. As a result, lower-income Americans spend far more of their disposable income on the lottery than richer Americans do.
2. Lotteries are regressive.
Among those who play the lottery, the top 20 percent of earners spend a bigger proportion of their disposable income on lottery tickets than do the bottom 60 percent of earners. It’s true that lottery plays are more regressive than other forms of gambling, but it’s worth noting that the very poor, those in the bottom quintile, don’t have a lot of discretionary income to begin with.
It’s also important to remember that while the lottery is a popular form of gambling, it isn’t an especially profitable one. While it does bring in significant revenues, it doesn’t generate as much as some other forms of gambling and isn’t particularly good at attracting new customers. That is why other forms of gambling are much more popular than the lottery. And it’s why state governments should carefully consider their options before expanding the lottery.