Many things in life are awarded through lottery-like processes, whether subsidized units in a housing block or kindergarten placements at a reputable public school. The most visible, however, is the financial lottery—the game in which paying participants enter a draw to win cash prizes. Although the lottery’s roots are ancient, the modern version was first popularized in the United States during the late-twentieth century, when states sought to solve budget crises without enraging an antitax electorate. The resulting popularity has left state legislatures scrambling to figure out ways to subsidize lotteries while limiting the harm they may do to poor communities.
For many people, buying a lottery ticket makes sense, even though they know they are unlikely to win. If the entertainment value or other non-monetary benefit of playing is high enough, the disutility of a monetary loss is outweighed by the expected utility of a big prize. For the rich, who can afford to buy a lot of tickets, winning a large jackpot can mean a luxury vacation, a new car, or a close to debt-free future.
But while the lottery is widely viewed as a source of improbable wealth, it also has an ugly underbelly: The desire to win, however unlikely, can become a lifelong fixation. This is especially true for those living near the poverty line, where the purchase of a ticket can be a coping mechanism for feelings of insecurity and hopelessness. A survey by consumer financial company Bankrate found that those making more than fifty thousand dollars a year spend about one per cent of their income on tickets; those earning less than thirty-six thousand dollars, thirteen per cent.
Lotteries are a form of gambling, and like any other kind of gambling, they are sensitive to economic fluctuations. During the Great Depression, when wages dropped and unemployment rose, lotteries increased in popularity. They were a way to raise money for government projects, but they also served as a distraction from the depressing reality of economic hardship.
Since then, lotteries have expanded to cover everything from the national debt to state education funds. They’re even used to finance military campaigns, despite the fact that most soldiers aren’t prone to betting on the outcome of battles. The money generated by lotteries, along with sin taxes and income tax on winnings, helps fund many government programs.
Those who oppose promoting gambling on behalf of the government often argue that lotteries are a “tax on stupidity,” or that people who play the lottery don’t understand how rare it is to win. But the evidence suggests that this is not a valid argument. Lottery sales are a function of economic fluctuations, and as unemployment and poverty rates rise, so do lotteries.
State lotteries are also subject to the same marketing strategies as any other commercial product. Ads feature huge, awe-inspiring jackpot amounts. They’re promoted in neighborhoods where the populations are disproportionately poor and Black. And, as with other commercial products, lotteries rely on the psychological effects of addictive behavior to keep players coming back for more.