The Problem With the Lottery


A lottery is a gambling game or method of raising money in which tokens bearing numbers are sold and winners are selected by lot. Prizes may be cash or goods or services. In some lotteries, a single grand prize is offered, while others award a number of smaller prizes, or even nothing at all. Lotteries are commonly operated by state governments, though some countries have private lotteries.

In the US, the largest state lottery is New Hampshire’s, which generates about $10 billion in annual sales. While the majority of that revenue goes to retailers, the lottery’s biggest winner is the state government, which gets 44 cents of every dollar spent on tickets. Lottery officials often argue that this is a “voluntary” tax and thus doesn’t harm the general public. But that argument is flawed, and the fact that lottery revenues have continued to grow while other taxes have declined suggests that there’s a deeper problem here.

During the lottery’s early years, many states promoted it as a way to provide services without imposing onerous taxes on the working and middle classes. But as lottery revenues have exploded, those same states have cut back on the programs that made lotteries popular in the first place. Ultimately, the result is that people are spending more and more on a product that doesn’t make them any better off.

While many people say they play the lottery to help other people, the truth is that they do it for themselves. And when you talk to these gamblers, they almost always admit that they’re spending $50 or $100 a week. It’s a form of self-sabotage that’s hard to break.

In fact, I’ve talked to many people who have been playing the lottery for decades. Invariably, they tell me that they’re “smarter” than those who don’t, and that they think they’ll win the big jackpot someday. But those conversations remind me of a principle from 14th-century philosophy: Occam’s razor, or the principle that the simplest explanation is often the best one.

The fact is, the odds of winning the lottery are incredibly low. And even if you did win, you would have to spend a fortune to buy a single ticket. And the vast majority of those tickets are sold at small retailers, which are subsidized by the state through bonuses paid to them for selling lottery tickets.

The truth is, state lotteries are an example of classic bad policy. They’re a case study in how public policies are made piecemeal and incrementally, with little or no overall oversight. As a result, few states have a coherent “gambling policy” or even a “lottery policy.” This approach makes it difficult to identify the problems and develop solutions that will improve the industry. It also leaves state officials with a dependence on revenues that they can’t control or manage. That’s why it’s time for a change. It’s time for a lottery reform revolution. But what should it look like?