How to Understand the Lottery and Why You Should Think Twice Before Spending Any Money


Many people spend billions of dollars annually on lottery tickets, hoping to win a big prize. But a lot of people who play the lottery have little idea of how much their odds are of winning. The game is an enormous gamble, and a dangerous one for many people, especially those living on tight budgets. This article, by NerdWallet staff writer Daniel Chartier, explains how to understand the lottery and why you should think twice before spending any money on it.

In the United States, state governments own and operate lotteries as a monopoly and use proceeds for public purposes. The first state-sponsored lotteries were established during the 17th century, and they proved to be very popular, being hailed as a painless form of taxation. The American lottery grew rapidly after World War II, when states looked for ways to expand social safety nets without enraging anti-tax voters with major increases in taxes or cuts in spending.

Traditionally, state-run lotteries have promoted their products by emphasizing that the proceeds are used to benefit a specific public good, such as education. The message is effective, but it masks the underlying regressivity of the gambling business, and of lottery sales in particular. Moreover, it distracts attention from the fact that the lottery is still a form of gambling and that, by definition, its profits are based on the chance that someone will lose their money.

The casting of lots has a long history, as attested to by numerous instances in the Bible and Roman emperors’ penchant for using lotteries to distribute wealth. But it wasn’t until the modern age that the lotteries became an everyday part of life, and when they did they were marketed as a kind of painless taxation in which players willingly spend their money for a chance to win something for themselves.

Today’s state-run lotteries are run like businesses, focusing on growing revenues by expanding into new games and deploying aggressive advertising campaigns. But the promotion of the lottery also raises concerns about its negative impact on poor and problem gamblers, as well as questions about whether it’s an appropriate function for the state to promote gambling.

Although people have always liked to gamble, there is more to lottery sales than just that. Lottery commissions know this, and that’s why they focus on two messages primarily: a) the experience of scratching the ticket is fun; and b) you have to be really lucky to win. Both messages obscure the regressivity of the lottery, and leave the impression that it is not something serious that should be taken lightly. This is a mistake.