The Ugly Underbelly of the Lottery Industry


The lottery is a popular form of gambling in which a prize, often money, is awarded to a randomly selected individual. It is distinct from other forms of gambling in that payment of some kind (often a consideration) must be made in order to participate, and the prizes are determined by chance rather than skill or effort. Although the casting of lots has a long history in human society, the use of lotteries for material gain is much more recent; the first recorded public lottery to distribute prize money was held in Bruges in 1466 for town repairs. Today, the vast majority of lotteries involve purchasing tickets for a small chance of winning a prize that may be in the form of money or goods.

The attraction of lottery play is rooted in the inherent pleasure in betting on random events and the desire for instant wealth. The ubiquity of lottery ads on television and billboards, along with the ever-larger jackpot amounts, create an impression that almost anyone can win. In reality, most players are irrational gamblers who don’t have the mathematical understanding or the financial discipline to limit their wagers. In addition, the regressive nature of state lottery profits and the tendency for lower-income players to spend far more than they can afford to lose, create an ugly underbelly to the game that is difficult to address.

In the midst of this irrational behavior, there is a real sense that winning the lottery is a way out of poverty and into prosperity. But it is a far-fetched fantasy, and the fact that people continue to participate in lottery games shows that there is something deeply satisfying about trying one’s luck.

Even though the odds of winning are very long, lottery play is a huge business with numerous players and significant revenues. The industry develops extensive and specific constituencies, including convenience store operators (who are the primary lottery retailers); lottery suppliers (heavy contributions to state political campaigns by these businesses are regularly reported); teachers in states where some lottery revenues are earmarked for education; and state legislators, who quickly become dependent on the easy “painless” revenues.

In an anti-tax era, many voters are willing to allow the government at any level to profit from activities that they do not directly control; lotteries are widely seen as an acceptable alternative to raising taxes. But just because a tax substitute is easy for politicians to adopt does not mean it is good policy. Gambling, whether legal or illegal, carries with it significant social costs that are not easily or quickly replaced by state revenue. These costs include increased risk of addiction, family discord, and criminal activity. Those costs are significantly higher than the monetary benefits that lottery participants receive. Thus, in the long run, it is not an effective strategy for governments at any level to rely on gambling as a source of revenue. Instead, they should focus on reducing the addictiveness of gambling and its ill effects.