In a time of declining incomes and vanishing social safety nets, it’s no surprise that people have been looking for ways to get rich quick. But it may not be as easy as they think.
As it turns out, the lottery isn’t just a source of instant wealth—it’s an addictive form of gambling that can make people spend far more than they can afford to lose.
Whether it’s a ten-dollar scratch-off ticket in a convenience store or a Powerball and Mega Millions ticket purchased along with your groceries at a Dollar General, modern lotteries are not above availing themselves of the same tactics as tobacco companies and video-game manufacturers to keep people hooked. “Lottery officials understand the psychology of addiction and are not above using it to their advantage,” writes Joshua Cohen in New York magazine.
Though Cohen’s article focuses on the rise of the modern lottery, its history goes back hundreds of years. During the fourteen-hundreds, for example, towns in the Low Countries used lotteries to fund municipal buildings and war reparations. In the sixteen-hundreds, lottery games migrated to England, where Queen Elizabeth I chartered the nation’s first national lottery in 1567 and used the profits for war reparations and charitable purposes.
The modern lottery is a complex business, but its core elements are relatively simple. First, there’s a mechanism for recording the identity and amount staked by each bettor. Typically, this is accomplished by selling tickets that are numbered and then deposited with the lottery organization for later shuffling and selection for the drawing. A small percentage of the money is deducted for the costs of organizing and promoting the lottery, while the remainder is earmarked for prizes.
Prizes range in size from a few hundred dollars to many millions. Potential bettors seem to favor a chance at large jackpots, and ticket sales often surge when a drawing features a large top prize. Other factors that affect the size of a prize include how much is spent on organizing and promoting the lottery and how many smaller prizes are offered.
In the nineteen-sixties, when the lottery was becoming increasingly popular in America, growing awareness of all the money to be made in gambling collided with a state-funding crisis. With population growth, inflation, the cost of war, and health-care costs soaring, balancing the budget for state governments became more difficult than ever. In many cases, it meant raising taxes or cutting services—both options that are highly unpopular with voters. In response, lawmakers turned to the lottery as a way to increase revenue without raising taxes or cutting services.