The Truth About the Lottery

The lottery is a common way for states to raise revenue. People in the US spend upward of $100 billion on tickets each year, making it one of the most popular forms of gambling in the world. States promote the games, with billboards on the side of the road promoting the size of jackpots. They make it clear that the odds are long. But they also imply that it’s not just a waste of money, but that there is some sliver of hope that you might win.

It’s not clear how much utility people get from the entertainment value of the lottery, but the disutility of losing money can easily outweigh that. Especially for the very poor, who play a larger share of the tickets. And the regressive nature of lotteries is a concern. People in the bottom quintile don’t have enough discretionary spending to justify a ticket, so they pay a higher price for a lower chance of winning.

Lottery has been around since ancient times, with records from the 15th century in towns like Ghent, Bruges and Utrecht that mention public lotteries to raise funds for town fortifications and for the poor. More recently, state governments have promoted lotteries as a source of “painless” revenue, arguing that players voluntarily spend their own money on tickets. But this is misleading: Lottery revenues aren’t dependable and often replace other sources of revenue, leaving the targeted program no better off.