The Truth About the Lottery


The lottery is a government-sponsored form of gambling where people pay to enter a drawing for a prize, typically ranging from a few thousand dollars to millions. Its modern incarnation, which started in the nineteen-sixties, was spurred by growing awareness of all the money to be made in the gambling business and a crisis in state funding: as growth and inflation eroded tax revenues, governments were faced with the choice of raising taxes or cutting social safety net services, both of which would be unpopular with voters.

The earliest lotteries were a kind of party game—during Roman Saturnalian feasts, for example, hosts distributed pieces of wood with symbols on them to guests who then drew for prizes that they took home with them. Later, governments drew lots for everything from property to slaves. When lottery-like games first arrived in America, they were met with mostly negative reactions, and ten states banned them between 1844 and 1859.

But the lottery has persisted, and it has become the most common way that governments raise funds for public projects, from a few hundred thousand dollars to billions. The reasons are complex and nuanced, but they all stem from the same fundamental logic: if you pay for a chance to win big, you have a much greater chance of winning big than doing the same thing yourself.

Many people simply like to gamble, and the lure of winning a big jackpot is almost irresistible. But there’s also a lot more going on behind the scenes, and the fact is that lotteries are dangling an offer of instant riches in an era of inequality and limited social mobility.

Lotteries may not be a good idea for everybody, but they are especially bad for poorer Americans. They spend over $80 Billion on the games each year, and if they win they are likely to end up bankrupt within a few years, as this study shows. The authors suggest that a simple solution is to educate people on the odds of winning, and encourage them to save their ticket purchases instead.

Using data from the Powerball and Mega Millions, this article illustrates how lottery winners can be broken into three groups based on how they use their winnings. The bottom group, which is the smallest in size and includes those who spend most of their winnings on tickets, spends less than 10% of their winnings and has an average income of less than $23,000. The next group, which is larger in size and includes the most committed gamblers, has an income of between $37,000 and $50,000 and spends more than 20% of their winnings. Finally, the largest group is in the middle and has an income between $50,000 and $75,000, which is where most lottery players fall. The authors also provide a chart showing that, for this range of prize amounts, all groups exhibit the same distribution pattern, as the probability of winning is the same for every application.