Lottery Costs – Are They Worth the Money?

In 2021 Americans spent more than $100 billion on lottery tickets, making it the most popular form of gambling in the country. Lotteries are a fixture in American society, and they raise significant revenue for state governments. But they also come with costs—and the question of whether those costs are worth the money for taxpayers is one that deserves scrutiny.

When lotteries are promoted as a way to save children and other worthy causes, they send the message that there is nothing wrong with spending a little bit of your hard-earned money in exchange for a sliver of hope. But in fact, lottery play is regressive and has real consequences for the poor. It also gives people false hope, a fantasy of instant wealth that distracts them from saving for the future or investing in their communities.

The first public lotteries were held in Europe as early as the 15th century, and were designed to raise funds for town fortifications and to help the needy. The name of the activity is unclear, but it may be derived from Middle Dutch loterie or Middle French loterie, or perhaps a calque on Middle English lotinge “action of drawing lots.”

Lottery advertising necessarily focuses on selling the experience of purchasing and scratching a ticket—and on promoting large jackpots. It also obscures the regressivity of lotteries and the fact that many winnings are paid out in a lump sum rather than over time, reducing their actual value by a substantial amount before income taxes are applied. These distortions are the result of state officials’ focusing on maximizing revenues, and running at cross-purposes to the larger public interest.