The Truth About Lottery Promotions


I’ve talked to a lot of lottery players — people who play $50, $100 a week. They defy the kind of expectations you might have going into a conversation like this, which is that they’re irrational and they don’t know how bad their odds are, or that they think they’ve got some quote-unquote secret system that’s going to win them the jackpot, if only they buy enough tickets and pick the right numbers. Instead, they walk in clear-eyed about the odds and how the games work. They know it’s a long shot. But they also have come to the logical conclusion that for a host of reasons, this is their best or only hope for a better life.

State governments have a complicated relationship with gambling. On the one hand, there is a general public that enjoys it and supports state-sponsored gambling. On the other, there are many who have concerns about the way the game is conducted, whether it leads to problem gamblers or simply squanders the proceeds of taxation. Historically, states have managed this tension by making decisions on a case-by-case basis and relying on the lottery to raise money for various purposes.

The principal argument for state lotteries is that they are an excellent source of “painless” revenue, with players voluntarily spending their own money for the benefit of the public good. In this sense, lotteries are much like sports betting in the United States, which is often defended on the grounds that it allows fans to watch their favorite teams and earn money for the industry. However, research shows that the percentage of revenue generated by lotteries is far lower than in sports betting.

In addition, the majority of lottery revenues come from middle-income neighborhoods, while those in low-income areas participate at significantly smaller levels. This has important implications for the social safety net, as it indicates that a significant portion of the poor are being left out of these programs.

The way lottery promotions are framed obscures the fact that it’s a regressive revenue-generating scheme and doesn’t even always generate the kind of benefits that would justify its existence in the first place. While lottery officials try to sway the public by emphasizing how much fun playing the game is, they fail to take into account that for many it’s more than just a game.

For those who do win the big prize, the first thing they must do is get their financial house in order. That involves paying off debt, setting up savings for college and retirement, diversifying investments, and building a strong emergency fund. It’s an exercise in personal finance 101 that most past winners will tell you can be daunting. They’ll also offer cautionary tales about the psychological impact of sudden wealth and all the changes that come with it. The biggest change, though, is to the winner’s mental health. And that’s something you can’t farm out to a crack team of helpers.