The Lottery Business


Lottery isn’t just a popular game, but a big business that brings in billions each year. But it is a business that relies on shady practices and insidious tactics to keep people hooked. Governments shouldn’t be in the business of promoting vices, particularly ones as harmful as gambling. Yet state lottery commissions aren’t above exploiting human nature and dangling the promise of instant riches. In an era of income inequality and limited social mobility, they know just how to lure in consumers with billboards touting “Mega Millions” and “Powerball” jackpots. It’s not surprising, then, that America spends over $80 Billion on lottery tickets each year – that is more than a thousand dollars per household. This money could be used to build an emergency fund or pay off credit card debt. But most of it is lost, as the vast majority of winners go bankrupt within a few years.

Despite the risks, there are many reasons why lottery players continue to play. The most obvious is that they are hooked on the idea of winning, however improbable that might be. The game also offers an escape from the everyday grind. People feel that, if they win, it will be the start of something new and better for them and their families. Moreover, they are convinced that the odds are so long that there is a small sliver of hope that they might get lucky.

In early America, as in other parts of the world, lotteries played an important role in raising money for public works projects. Early Americans were both short on taxes and desperate for revenue, and they quickly came to see lotteries as a way to get public services without raising taxes.

But the moral issues posed by lotteries were complicated. Those who supported them dismissed long-standing ethical objections to gambling, arguing that people would gamble anyway, so governments should simply reap the profits. (This argument, Cohen notes, gave moral cover to legislators who were seeking ways to raise revenues and avoid a reversal in voter support for their tax policies.)

In the end, however, lottery advocates won out, and today state lotteries are a major source of revenue. They have become, as Cohen writes, “budgetary miracles,” a way for states to appear to generate large sums of money from thin air and thus spare themselves the unpleasantness of increasing taxes.

But, as with the exploitation of alcohol and tobacco, there is a dark side to this strategy. In addition to the risk of addiction, lotteries are often tangled up in questionable activities, including slavery. In the past, colonial lotteries raised money for slaveholders, and one enslaved man, Denmark Vesey, won a prize in a South Carolina lottery that ultimately led to his liberation from slavery. In other words, lotteries are just another example of how states and citizens have learned to live with the ugly underbelly of human nature. It’s a lesson that, unfortunately, seems to be eternally resonating.