The lottery is an enormously popular game in which numbers are drawn at random to determine a winner. People pay a small amount of money for the chance to win big prizes that can be anything from cash to houses to automobiles. In the United States, the lottery is a multibillion dollar industry that raises more than $40 billion per year for state governments. It’s an ugly underbelly of capitalism—a form of gambling that doesn’t even give winners the right to keep their winnings. But the odds of winning aren’t what make people feel that the lottery is a necessary part of their lives; instead, it’s that they have no choice but to play, because they don’t know how else to get ahead.
The word “lottery” derives from the ancient practice of casting lots for everything from kingship to property rights, and it’s not surprising that lotteries have been used throughout history. In fact, the first state-sponsored lotteries are attested in the fifteenth century, when cities held public lotteries to raise money for walls and town fortifications.
While some states embraced the lottery as an anti-tax measure, others began to find themselves in funding crises, and faced with a dilemma: They could balance their budgets by raising taxes or cutting services, but both options were highly unpopular with voters. As a result, many states turned to the lottery in an effort to raise money without angering their anti-tax electorate.
In the nineteen-sixties, lottery revenues became a major source of state income, and by the end of the century they were a significant portion of many states’ budgets. But the lottery was not a panacea, and as state governments began to grow aware of the hidden costs of the lottery, they started looking for other ways to reduce spending.
One way that they did this was by lifting prize caps, meaning that the odds of winning were made even worse. The New York Lotto, for example, had one-in-3.8 million odds when it launched in 1978; today’s odds are more like one in forty-five million. This made sense for the lottery’s promoters, who knew that people were willing to spend their money on something that had a lower chance of yielding a substantial payout.
In order to make the gamble more appealing, lottery promotions emphasized that people won’t lose their money, and portrayed it as a fun experience. This message obscured the regressivity of the lottery, and it also hid the fact that many people who play the lottery are not just casual players; they’re committed gamblers who use a large share of their incomes on tickets. They’re not stupid; they understand that the odds are long, and yet they continue to play because they can’t help it. The answer to this paradox is not to change the odds, but to change the incentive structure. Governments should not promote vices that drive people to spend so much of their hard-earned dollars on the wrong things.