Lottery – How It’s Used and Who Wins

Lottery: How It’s Used and Who Wins

State governments’ decision to enact lotteries was based partly on the need for revenue. But it was also based on a belief that gambling is inevitable and that the states might as well cash in on people’s natural proclivities by offering games of chance. That is a flawed logic. It obscures the fact that lotteries generate compulsive gamblers and regressively drain wealth from those with limited financial resources.

When lottery proceeds are not distributed as prizes, they tend to go toward a variety of public programs. And there is typically a small percentage paid out in commissions to retailers who sell tickets. This money may also go toward advertising and salaries for lottery administrators. But many critics say that the bulk of lottery proceeds is essentially a disguised tax on the poor. Studies have found that the very poor spend a disproportionately large share of their discretionary income on lottery tickets.

The first state-administered lotteries were similar to traditional raffles, with people buying tickets for a drawing held at some future date. But innovations in the 1970s made it possible to offer games that let players instantly win cash prizes. Those games – known as scratch-off tickets – feature lower prize amounts and much better odds of winning, on the order of 1 in 4. These days, experts say, the industry is trying to stay competitive by constantly adding new games. That keeps revenues growing, but they eventually level off and even decline.