Is the Lottery Worth the Risk?
The lottery is one of the most popular forms of gambling in America. It’s estimated that people spent upward of $100 billion on tickets in 2021. State governments promote it as a way to raise revenue. But how meaningful is that revenue in broader state budgets and is it worth the trade-offs to people who lose money on tickets?
The answer is a bit complicated. Lottery players are disproportionately lower-income, less educated, nonwhite and male. They spend a significant share of their disposable income on tickets and are likely to have other financial problems. So, despite the popular notion that everybody plays, that’s not really true. Moreover, the vast majority of winners are not financially independent. They owe taxes, and they often struggle with debt, addiction and family issues.
Many people see purchasing lottery tickets as a low-risk investment, with the chance of winning big money. It’s true that the odds of winning are incredibly slight and that playing for years can cost you thousands in foregone savings over time. But it’s also true that achieving wealth is highly difficult and that investing in a job, retirement fund or education can have much higher returns.
Those who play the lottery may also think that it is a form of civic duty, or at least an alternative to more burdensome taxes. This argument was popular in the immediate post-World War II period, when states were expanding social safety nets and wanted a painless source of revenue to do so. Unfortunately, the money lottery players contribute to government receipts could be better spent on other things, including helping families out of poverty and investing in infrastructure.
What’s more, the regressive nature of the lottery is obscured by a strategy that lottery commissions employ to make the games seem fun. They promote glitzy jackpots that grow to newsworthy amounts, which draws attention to the games and encourages people to play. This makes it harder to appreciate just how much the games are costing people.
Another thing that’s hidden in the conversation about how to win the lottery is the role of luck. While there are some strategies, like buying Quick Picks, that can improve your chances of winning, it’s also important to consider what other people are doing. Harvard statistics professor Mark Glickman recommends picking numbers that are not common, such as children’s ages or birthdays. This helps ensure that you won’t have to split the prize with someone else who picked the same numbers.
People who play the lottery also tend to be more irrational than you might think. You probably know a few people who don’t usually gamble and yet regularly spend $50 or $100 per week on tickets. Talking to them reveals that they have strong beliefs about how lucky they are and that they’ve been duped by the marketing of the game. But you can learn something more about how to make smart choices about the lottery if you’re willing to take the time to study it.