For the first time in American history, a large number of states are using a government-run lottery to raise money. In 2021, Americans spent about $105 billion on state lottery tickets. But is this a good thing? Does it help the poor, or prey on them? And how much of that money actually goes to the state government?
In this article, David Cohen explores the origin of the official lottery. He argues that it started when awareness of all the money to be made in gambling collided with a crisis in state funding. Lottery advocates claimed that the proceeds of a state’s lottery would be enough to float most state governments, and that it would keep money in the pockets of average citizens, rather than forcing them to pay higher taxes. But the reality was very different. Lottery revenues amounted to a mere drop in the bucket for most state budgets, raising only a tiny fraction of total state income and expenditure.
As with all commercial products, lottery sales are sensitive to economic fluctuation. In general, they rise as incomes decline and unemployment increases. In particular, they tend to increase in neighborhoods that are disproportionately Black and Latino. This suggests that, in addition to a desire to improve their lives, these consumers are buying into a meritocratic fantasy: that they will become rich through the luck of the draw. Whether or not that happens, the fact is that they are continuously paying into a system that is mathematically stacked against them.