The Public Benefits of the Lottery

In the United States, people spend upward of $100 billion a year on lottery tickets, making it the most popular form of gambling. State governments promote the lottery as a way to raise revenue for things like education, senior support and infrastructure projects. But the broader public welfare benefits of lotteries are rarely taken into account and the regressivity of the taxes they raise is often obscured.

The idea of casting lots to make decisions or determine fates has a long history (there are multiple instances in the Bible) but lotteries that distribute cash prizes for material goods have only a relatively recent history. Benjamin Franklin held a lottery to raise funds for cannons during the American Revolution and Thomas Jefferson attempted a private lottery to alleviate his crushing debts.

But the lottery became a commonplace part of state life after New Hampshire introduced it in 1964 and inspired other states to follow suit. At that time, Americans were growing disillusioned with government spending and widening economic inequality fueled a new materialism that suggested anyone could become rich through effort or luck. Anti-tax movements also led lawmakers to seek alternatives to raising taxes and lotteries seemed a good fit.

But there are many reasons to question the legitimacy of state-run lotteries. They tend to promote irrational beliefs about winning (jackpots are calculated based on how much you would get if the entire prize pool was paid out in annuity over 30 years, with inflation and taxes dramatically eroding its current value) and can encourage unhealthy spending patterns that may undermine financial well-being. They can also contribute to magical thinking and unrealistic expectations, making it easy to become fixated on winning instead of focusing on more practical ways to create wealth.