The Benefits and Disadvantages of the Lottery

Gambling News Oct 20, 2023


In 2021, Americans spent $100 billion on lottery tickets, making it the country’s most popular form of gambling. But just how much that revenue means to states’ budgets—and to people who lose money in the process—is unclear. I’m not saying lotteries are evil, but they deserve a more rigorous examination than the cheery op-eds that trumpet their benefits.

In colonial America, public lotteries played a crucial role in financing roads, libraries, colleges, canals, and bridges. They helped spread England’s culture and economy across the colonies and, in some cases, even into remote places like Newfoundland. The Continental Congress used a lottery to raise funds for the American Revolution, and private lotteries were also common in Britain and the colonies.

These lotteries were largely driven by the need for a cash infusion to pay for infrastructure, and they were seen as painless forms of taxation. As Cohen writes, “Lotteries enabled politicians to maintain existing services without raising taxes and thus risking punishment at the polls.”

Despite their painless nature, lotteries have had some significant downsides. They can promote unhealthy gambling habits, especially among those with a higher income, and they can be associated with increased crime. But perhaps their most harmful effect is on the moral fabric of a society.

Lotteries can help people to see themselves as successful and wealthy, even if they have not earned their wealth through their own efforts. They can make people feel better about the luck of their birth, or, as Shirley Jackson puts it in her short story “The Lottery,” they can turn “everyday events into a drama of destiny and fate.”

Although most lottery purchases can’t be explained by decision models based on expected value maximization—lottery tickets cost more than they are likely to win, so someone maximizing expected utility would not buy them—more generalized models can account for them. These can include risk-seeking behavior and the desire to experience a thrill, as well as an underlying sense of fairness. A more amorphous motivation, however, may also be at play. Lotteries can give some purchasers a chance to live out their fantasies of becoming rich and powerful. And, as Cohen notes, these desires accelerated in the nineteen-seventies and eighties, a time when income inequality grew, job security eroded, health-care costs rose, and our long-held national promise that education and hard work would allow all children to outperform their parents’ economic status ceased to be true for most working Americans.