The Dark Side of the Lottery

A lottery is a form of gambling in which prize money is awarded by drawing lots. The casting of lots for decisions and determining fates has a long history (the Old Testament includes instructions for Moses to take a census and divide the land by lot), but public lotteries that distribute prizes of material value are relatively recent: the first one recorded in the West was held during Roman times to fund municipal repairs and to give away slaves during Saturnalian feasts, and the first publicly organized lottery to offer tickets for sale was introduced by Francis I in 1466 in Bruges, Belgium.

In colonial America, lotteries raised funds to finance both private and public projects, including paving streets, building wharves and churches, and purchasing and maintaining military supplies and ships. Benjamin Franklin sponsored a lottery to raise money to purchase cannons for Philadelphia’s defense during the American Revolution, and George Washington endorsed a private lottery in 1768 to build roads in Virginia. Lotteries continued to be popular in the United States, becoming widely used as a mechanism for collecting “voluntary taxes” for state governments and facilitating commercial ventures.

Today’s state lotteries differ from those of the past in two major respects: They are much more expensive, and they are structured differently. Most modern state lotteries are not traditional raffles, in which the public purchases tickets for a future drawing; instead, they are “instant games,” which involve the distribution of prizes for a small initial payment. These games are popular because they require less time and effort than traditional lottery draws, while allowing participants to see immediately whether they have won or not.

Moreover, instant games are also a lot more lucrative than their traditional counterparts. The average scratch-off ticket offers odds of winning that are about 40% greater than those of traditional lottery draws, and the probability of winning can increase substantially if the tickets are purchased in large quantities.

These advantages make instant games a profitable venture for many companies and state lotteries. But they have a dark side, and they are particularly harmful to lower-income communities. A study conducted in the 1970s found that, while people from middle- and upper-income neighborhoods participate in state lotteries at rates disproportionately higher than their share of the population, those from low-income neighborhoods tend to play at lower levels than other citizens.

Studies have shown that the popularity of lotteries is largely dependent on their ability to convince the public that the proceeds will be spent on a “public good.” This argument is especially effective during periods of economic stress, when state governments are under pressure to increase or cut tax rates and programs. But it has little relation to a state’s actual fiscal condition, and studies have found that lotteries enjoy broad public support even when their objective fiscal health is mediocre.