The lottery is one of the few ways in which government can generate revenues without raising taxes, which invariably angers voters. So when a state wants to buy a new highway, it needs to find some other way to pay for it besides increasing sales or property taxes. One option is to sell lottery tickets, and they are popular, even in states where gambling is illegal. But is the lottery really a good thing?
Lotteries are a form of gambling, but the proceeds from these games benefit a variety of public services. These include park services, education, and funds for seniors & veterans. In the case of a state lottery, the proceeds are also used for other purposes, including building roads.
But there is an ugly underbelly to this system, and it has to do with how people choose to spend their money. Those in the bottom quintile of incomes tend to spend more on tickets than those in the top quintile, which makes this form of revenue generation highly regressive. And lottery advertising is heavily concentrated in poor neighborhoods, a factor that skews the overall numbers of those who play the lottery.
It would be easy to dismiss this regressive aspect of lottery playing as “taxing the stupid,” but that is a misreading of what the lottery actually does. Instead, it responds to economic fluctuations, and the sale of lottery tickets increases when unemployment and poverty rates rise. Defenders of the lottery posit that players don’t understand how unlikely they are to win or that they enjoy the experience of buying and scratching a ticket, but this message obscures the regressivity and hides how many people play.
Moreover, the idea that winning the lottery is “luckier” than other forms of gambling ignores the fact that no set of numbers is luckier than any other set. As the old saying goes, “you’re just as likely to pick the winning numbers as the next guy.”
To address the regressive nature of the lottery, advocates have shifted strategy. Instead of arguing that a lottery would float the entire budget, they began to focus on a single line item that was popular and nonpartisan—usually education or parks or veterans’ aid. That approach was a success, as it allowed them to frame the lottery as a budgetary miracle, a solution that did not require raising taxes.
In addition, they did not shy away from availing themselves of the psychology of addiction: everything about the lottery—including its ad campaigns and math behind the tickets—is designed to keep people coming back for more. This is not a far cry from what tobacco or video-game manufacturers do. But it is not what we normally think of when we talk about sin taxes, and it is not what the public expects from a government. For these reasons, it is time to reconsider the lottery. And not just as a way to raise revenue, but as an effective tool for public health.