The Hidden Cost of Playing the Lottery


The first lotteries to offer tickets for sale with prizes in the form of money were recorded in towns in the Low Countries in the early fifteenth century, though the term “lottery” is probably a calque from Middle Dutch lootje or Loterie (the latter meaning the action of drawing lots). The earliest English state lotteries began in 1569, despite Protestant prohibitions on gambling.

In the immediate post-World War II era, states were casting about for ways to expand their array of social safety net services without enraging an increasingly tax-averse electorate. The lottery seemed a solution, and it proved remarkably successful at delivering the promised funds to support things like education.

But a funny thing happened on the way to the jackpot: people became addicted to playing the lottery. And when they did, it was not only a financial drain on their wallets but also a psychologically dangerous exercise that could rob them of the ability to take care of themselves and their families.

To keep ticket sales robust, lotteries have to pay out a respectable percentage of their proceeds in prize money. But that cuts into the amount of revenue available for things like education, the ostensible reason state governments sponsor lotteries in the first place. Consumers generally don’t understand that the winnings they receive are a hidden form of tax.

Lottery commissions know this, which is why their advertising messages, from the tone of voice to the math used in ads, are designed to make players think they’re playing a game of chance and that their odds of winning are slim, but that there’s always a glimmer of hope.