The Truth About the Lottery

The drawing of lots to determine ownership or other rights has long been a practice. It is recorded in the Bible, and it became a common way to raise money for towns, wars, universities, and public-works projects. In the modern era, state governments adopted lotteries in the immediate post-World War II period, mainly to expand their array of services without raising onerous taxes on middle and working class people.

Lottery sales have increased steadily since then. As of August 2008, all states except Alabama, Alaska, Hawaii, Mississippi, Nevada, Utah, and Wyoming had a lottery (see Figure 7.1). State-operated lotteries are legally monopolies and do not allow competing commercial lotteries to compete with them. As a result, state lottery profits are solely used by those states to fund public programs.

State officials promote the lottery to entice people to play by emphasizing the big prize. But the odds of winning are long. And that’s not the only problem: The lottery also dangles the fantasy of instant wealth in a world of inequality and limited social mobility, encouraging people to spend more than they can afford on the chance to become rich overnight. Lottery commissions know this, so they push two messages primarily: One is that it’s just fun to buy a ticket; the other is that you can use your winnings to better your life. Some people believe both messages, but the truth is that playing the lottery is a serious financial gamble.