What is a Lottery?
A lottery is a form of gambling whereby people pay a small sum of money to have a chance of winning a large amount of money. It is often run by state or national governments to raise funds for a wide variety of purposes, including public works and charitable endeavors. People can also buy tickets to a sports event, movie or other entertainment venture through a lottery. The prize money for a lottery is usually the amount remaining after expenses, such as profits for the promoter, promotional costs and taxes or other revenues have been deducted from the total pool of prizes.
The history of lotteries is long and complex. In the 15th century, it was common in Europe for towns to hold public lotteries to raise money for a range of purposes, including town fortifications and to help the poor. Lotteries became especially popular in the seventeenth century, when colonial America used them to finance both private and public projects. The founding of Princeton and Columbia Universities was financed by lotteries, as were many roads, canals, bridges, churches, hospitals and other public buildings.
During the nineteen-seventies and eighties, America’s obsession with unimaginable wealth—the dream of hitting a big jackpot in the Powerball or a Mega Millions game—was mirrored by a steady decline in financial security for the working class. Income inequality widened, pensions and job security were cut back, health-care costs increased, and the long-standing national promise that education and hard work would enable children to do better than their parents faded.
In this environment, lotteries were a welcome source of revenue for states that didn’t want to raise taxes on the middle and working classes. In fact, the more the odds of winning a prize got worse, the more people wanted to play. Alexander Hamilton would have loved this: “To the average mind the difference between one-in-three-million and one-in-three-hundred-million odds is, as it were, nothing.”
As a result of this paradox, many lottery commissioners began to make their games more appealing by raising prize caps and increasing the number of numbers that could be drawn (and thus decreasing the chances of winning). They also began advertising the fact that the more tickets you bought, the higher your chance of winning. This strategy reflects the psychological principle that people prefer to think in terms of absolute probabilities rather than relative ones. The problem with this approach is that it obscures the regressivity of lottery proceeds, as well as how much people actually spend on tickets. Over time, this message has become ingrained in the national culture. In recent years, I’ve talked to a lot of lottery players, many of them long-term players who spend $50 or $100 a week on tickets. Their stories are eye-opening. They defy the expectations that you might have going into such conversations, which are often to assume that these people are irrational and have been duped, and that they don’t know that their odds of winning are very bad.