Throughout history, people have used lotteries to distribute goods and money. They were common during the Roman Empire (Nero was a fan) and later in Europe, as a party game, divination device, or a way to raise funds for local projects. The drawing of lots can be found in the Bible, too.
In colonial America, lotteries raised money for roads, libraries, churches, canals, bridges, colleges, and military campaigns. They played a major role in financing the French and Indian War, and helped build Princeton and Columbia universities. Lotteries became so popular that the first American president, Thomas Jefferson, endorsed them as “no more risky than farming.” But Alexander Hamilton grasped what would turn out to be lottery’s true essence: Most people, he wrote, “would prefer a small chance of winning a great deal to a great chance of winning little.”
The odds of winning a prize are determined by dividing the total number of tickets sold by the total possible combinations of numbers on the ticket. The winner’s portion of the prize pool is then calculated based on those odds. The costs of organizing and promoting the lottery, as well as profits and taxes, must also be deducted from this sum. The remainder is available for the winners. Some states have adopted a policy of awarding large, frequent prizes while others prefer to offer fewer but larger jackpots.
Lottery is a powerful force for addictive behavior, as evidenced by the fact that people are willing to spend more than $80 billion a year on lottery tickets. Often, these purchases are made to fulfill dreams that cannot be achieved with the money earned on an entry-level job or from a savings plan. The average American spends more than $300 a month on lottery tickets, and many end up in serious debt within a couple of years.
For politicians faced with declining tax revenues, lottery seemed like a magic trick: They could maintain current services without raising taxes and risk being punished at the polls. In the nineteen-seventies and eighties, as the income gap widened, job security and pensions eroded, and health care costs rose, lottery proponents argued that state-run gambling would help cushion the blow.
State-sponsored lottery games are a form of government-sponsored addiction, and they play the same psychological tricks as video-game makers and tobacco companies do. Whether it’s the slick marketing campaigns or the math behind the games, everything about the lottery is designed to keep players coming back for more. This is not the kind of public policy that deserves to be supported by a government that pretends to have the best interests of its citizens at heart. But it is an example of how far a nation will go to indulge its own self-destructive tendencies.