As a form of gambling, lottery is fairly straightforward: you buy tickets and hope to win. But as a social phenomenon, lotteries have more going on than that simple premise. People are drawn to them as a way to get rich fast in an era of limited social mobility, and they’re promoted as a good way to help the state budget. And when you add in the sliver of hope that a winning ticket will cure cancer or solve world hunger, they’re doing more than just making people feel better about themselves.
Historically, state governments have run lotteries to raise revenue without having to increase taxes or cut back on services. That arrangement worked well in the immediate post-World War II period, but as inflation rose and government expenditures increased, it started to break down. In the early 1970s, states began experimenting with alternative sources of revenue, including lotteries.
These were a big hit, particularly in the Northeast where the states had larger social safety nets and may have needed the extra money. But because they’re a business with a goal of maximizing revenues, the advertising necessarily focuses on persuading people to spend their money on them. And this may be at cross-purposes with the state’s broader public interest.
The prize amounts are based on the amount of revenue raised and the number of tickets sold. The profit for the promoter and the cost of promotion are deducted from the total prize pool before the jackpots are set. The prizes are generally a fixed sum, and the odds of winning are not very high.
If you’re not lucky enough to win, the rest of the money—including all those ticket sales—goes back to the state. It’s up to individual states how to use this money, though they are required to use at least some of it for education. Some states have even been more creative, investing some of this cash into programs like free transportation for the elderly and rent rebates.
While the idea of determining fates by the casting of lots has a long history (there are several instances in the Bible), the first recorded lottery with prize money in the form of cash was held in the Low Countries in the 15th century for municipal repairs. Since then, lotteries have exploded in popularity as a means of raising funds for everything from building parks to fighting crime. But they can also do more harm than good. While they may generate some tax revenue, they’re a dangerously addictive form of gambling that dangles the promise of instant riches to an increasingly desperate population. It’s time for a serious look at how this business should be conducted in the 21st century. It’s a business that’s ripe for disruption and deserves the full weight of scrutiny. We need to ask ourselves: is the lottery worth it?