Lottery is a big business, generating billions of dollars in revenue each year for the states that sponsor it. And a lot of people play it, even though they know the odds are pretty slim. But they play anyway, in the hope that somehow they will win. And if they do, they can buy anything from a new home to a car or a whole life.
This is partly an inextricable human impulse, a sort of hopeless and delusional hope that we are all going to be lucky someday. It’s also about a belief that winning the lottery is an exercise in meritocracy, the idea that you’re supposed to be able to afford to pay your way up the social ladder, and that a big jackpot will make that happen for you.
But there’s another, more nefarious reason to play. Lotteries are a way for state governments to expand their social safety nets without raising taxes. In the nineteen-sixties, as the boom that had funded America’s social expansion began to sputter under inflation and the cost of Vietnam, many states found themselves short on money. They could raise taxes or cut services, but both options were highly unpopular with voters. So they turned to lotteries, which were popular in the Northeast and in states with generous social safety nets, as a way of bringing in extra revenue without burdening middle- and working-class families.
To understand why, it helps to think about how lottery works. First, the prizes are enormous. The top prize in a drawing is typically millions or even billions of dollars. Then there are the organization and promotional costs, which take a share of the pool; the remainder goes to winners. And, of course, a percentage is taken as profit or commission by retailers and the state or sponsors.
As it turns out, the size of the prize doesn’t have much to do with the amount of money that is actually won, and this has a lot to do with the fact that most players are not looking at the overall odds of winning. Instead, they are focusing on how much money they can get for their tickets. So they will spend more on lottery tickets if the jackpot is higher, even though they are still less likely to win than those who have bought fewer tickets.
One result of this dynamic is that jackpots often balloon to newsworthy levels. This, in turn, drives ticket sales. And the bigger the jackpot, the more likely it is that the numbers will roll over to the next drawing and increase the chances of a jackpot even further.
It’s worth noting, too, that the wealthy, on average, purchase a smaller fraction of their incomes in lottery tickets than do those making less; according to a recent study by Bankrate, wealthier players spend about a tenth of their incomes on tickets while those earning less than fifty thousand dollars a year spend thirteen percent. But these numbers mask the regressive nature of the lottery, which is not meant to be an equal opportunity gamble.