How the Lottery Profits From Americans’ Addiction to Risk


The lottery is a gambler’s game with the odds of winning stacked against the player. But that hasn’t stopped people from playing, spending billions each year on tickets. Whether they’re playing for the money or the dream of a better life, state lotteries are profiting from Americans’ addiction to risk.

The concept of making decisions and determining fates by drawing lots has a long history, going back to the Bible and ancient Egypt. But a lottery with prize money of any size was first recorded in the fifteenth century, when towns in the Low Countries used them to raise funds for town fortifications and to help the poor.

By the eighteen-seventies, states began introducing their own public lotteries as a way of raising funds for education and other state services without increasing taxes on the middle class and working class. At the same time, income inequality widened, pensions and job security eroded, health care costs skyrocketed, and our long-standing national promise that hard work and education would provide a comfortable, secure future for children grew further out of reach for most working families.

At first, states figured they could float a large chunk of their budgets with lottery profits, but it quickly became apparent that the numbers weren’t adding up. As lottery revenues rose, the odds of winning a prize started to get worse and worse. The fact that the odds got worse actually made people play more, a phenomenon known as “inversely proportional” demand. The odds of winning were so bad that Alexander Hamilton and others argued that they were unjustified and unfair, but that did little to deter people from buying a ticket.

As the lottery’s popularity grew, state governments experimented with new games to keep revenues up. Traditionally, these games involved buying tickets in advance of a drawing that occurred weeks or months in the future. But innovations in the 1970s changed all that, allowing lottery officials to introduce new games with much shorter timelines between purchase and draw.

To entice players, modern lottery games typically feature a “random number generator” on the playslip, which allows players to mark a box or section and have the computer randomly choose their numbers for them. The idea is to make the process more fun for those who don’t have a set of favorite numbers or who don’t feel like analyzing the statistics behind each possible combination of numbers.

But even these new types of games have limits to their appeal. The most common strategy is to use a prize amount that’s large enough to attract the largest audience, even if it means offering very small prizes for certain combinations of numbers. This approach isn’t inherently wrong, but it has tended to produce lotteries with relatively small jackpots, which can be difficult to sustain over a long period of time. Moreover, it can result in a lottery’s becoming a bit of a repetitive experience for the average participant. This, in turn, tends to reduce the amount of money that a player is likely to spend overall.