The lottery is a booming business that draws billions of dollars from Americans every year. Some people play to have fun while others believe that it’s their only shot at a better life. Whatever the motivation, lotteries have a long history. The casting of lots for decisions and fates dates back to ancient times, and the practice of holding public lotteries to distribute prize money was first recorded in Western Europe in the fourteenth century. In modern times, though, state-run lotteries have become a major source of revenue for government programs.
In his book, Cohen tells the story of how this phenomenon came to be, from a time when states’ needs were in dire straits to a period when many voters were deeply averse to paying higher taxes or cutting state services. By the nineteen-sixties, as population growth and inflation combined with the cost of the Vietnam War to squeeze state coffers, balancing budgets was proving to be very difficult. State leaders realized that they had to either raise taxes or cut services, and the latter was deeply unpopular with voters.
Politicians were looking for a painless way to raise funds, and the idea of a lottery was attractive because it would allow states to make revenues appear out of thin air without raising taxes. So in 1964, New Hampshire became the first state to hold a state-run lottery, and its success inspired 13 more states to do the same.
As the number of lottery games increased, advertising grew as well. Lottery ads portrayed winners as happy and successful, showing them driving luxurious cars and living in luxury homes. But critics charged that the ads were misleading because they presented a biased picture of how winnings are distributed and did not mention that the vast majority of lottery participants lose. They also complained that the advertisements distorted the real chances of winning, inflating them and obscuring the fact that most prizes are paid out over many years, with inflation and taxes dramatically eroding their current value.
Today, 44 of the 50 states and the District of Columbia run lotteries. The six that don’t—Alabama, Alaska, Mississippi, Utah, and Nevada—do so for a variety of reasons: Alabama, which has strict religious restrictions against gambling; Alaska and Hawaii, which already have lucrative oil revenues; Mississippi and Nevada, which offer legal gambling and do not want a competing lottery to compete with their existing businesses; and Utah, where officials fear that allowing a state lottery could lead to a rise in problem gambling.
Regardless of the reason for playing, it’s no secret that the odds of winning are extremely low. But some players still feel the entertainment and other non-monetary benefits of lottery participation outweigh the disutility of monetary loss. Even so, it’s important to remember that most of the money spent on tickets ends up as profits for lottery organizers, with only a small percentage going to the prize winners. For this reason, it’s important to think about the social costs of lottery playing before deciding whether to participate.