Lotteries are the most popular form of gambling in the United States, with Americans spending upward of $100 billion on tickets in 2021. But how exactly do they work? And are the benefits worth the cost?
A lottery is a game of chance in which numbers are drawn to determine a prize. The concept is incredibly old—the drawing of lots is documented in ancient documents, and the practice spread to Europe during the fifteenth and sixteenth centuries. During this time, a variety of lotteries were used to raise money for towns, wars, colleges, and even public-works projects. The lottery’s connection to the United States dates back to 1612, when King James I of England established a lottery in Virginia to fund the first permanent British settlement.
Today, state-run lotteries are a ubiquitous part of American life, with more than 90% of the country’s population living in a lottery-playing state. People choose to play for a variety of reasons, but the most common reason is that they like to gamble. There’s no denying that some people are simply attracted to the idea of winning big money, but it’s important to remember that gambling is a very dangerous and addictive activity.
The vast majority of players are middle-aged, high-school educated white men with above average incomes, and they tend to be “regular players”—that is, they buy a ticket at least once a week. These are the people the advertising campaigns are targeting. The message is that buying a ticket will help you, not only by allowing you to try your luck at winning the jackpot, but also by showing that you care about the community and that you’re doing your civic duty by playing the lottery.
In the late twentieth century, as states struggled to maintain their array of services without raising taxes—and facing a ferocious anti-tax revolt—lotteries were promoted as budgetary miracles. Politicians could boast that they were creating new revenue streams out of thin air and, in so doing, liberate themselves from the need to raise taxes ever again.
These arguments were especially persuasive in the Northeast, where state lotteries started to appear. But they were also effective in the rest of the country, where governments grew desperate to expand their services without increasing taxes, and where residents were very accustomed to illegal gambling.
Ultimately, the state monopoly on lotteries gives these government-sponsored games a great deal of power over the lives of their customers. They can use that power to influence the odds of winning, and they can lure consumers with super-sized jackpots that attract national attention and drive sales. They can also manipulate prize payouts to ensure that the jackpots always seems newsworthy, and they can encourage repeat purchases by giving players more opportunities to win small prizes. They can even alter the rules of a lottery in order to keep the top prizes growing, which is one of the most obvious ways that they are using their monopoly power.