The Truth About the Lottery Industry


When people think about lottery, they usually envision a big jackpot, perhaps in the millions or even billions. But the truth is that most winnings are much smaller, sometimes a few thousand dollars or less. Even so, lotteries are a huge industry and a popular form of gambling. Gallup polls show that about half of all Americans have purchased a ticket at some point.

The first recorded lotteries began in the Low Countries in the 15th century, when towns raised money for a variety of purposes, including building town walls and fortifications. They also provided funds for poor relief, as evidenced by records in Ghent, Utrecht, and Bruges. Some scholars argue that lotteries are even older, since the casting of lots is attested to throughout the ancient world, and used for everything from deciding who would marry whom in the Roman Empire to divining God’s will.

Many states, especially those with generous social safety nets and high taxes, find it difficult to balance their budgets without hiking taxes or cutting services, which are often unpopular with voters. Lotteries, with their promise of instant cash and no need for new taxes or spending cuts, were hailed as “budgetary miracles.”

While many lottery players try to increase their chances of winning by buying more tickets or playing certain numbers that have sentimental value—like a birthday—the odds are actually very slight. Harvard statistics professor Mark Glickman has found that your chances of winning a given lottery game only improve slightly if you play more than one ticket, and that you are better off playing Quick Pick than choosing the numbers yourself.

A number of shady business practices have emerged around lotteries, including the use of illegal betting networks and other means to manipulate the results of the drawing. In some cases, these practices may be criminal, depending on the laws in your jurisdiction. However, most are not, and there are a number of ways to avoid them.

While critics of the lottery argue that it is a tax on stupidity—whether because players don’t understand how unlikely it is to win or simply enjoy the game anyway—lottery supporters counter that, as with all commercial products, lotteries respond to economic fluctuations. Sales rise as incomes fall, unemployment increases, and poverty rates climb. Lottery advertisements are most heavily promoted in neighborhoods that are disproportionately poor, black, or Latino. They also provide jobs and revenue for struggling states. But, as Cohen argues, these benefits are only a small part of the picture. Lottery profits also subsidize gambling and other harmful activities, and undermine state fiscal discipline. Ultimately, they contribute to the long-term decline of American wealth and standard of living.