The Hidden Costs of the Lottery


The lottery is a fixture in American society, and people spend upward of $100 billion on tickets each year. It is the most popular form of gambling, and states promote it by emphasizing that it raises money for children or other good causes. But this message obscures the fact that state lotteries impose significant costs on players. Most of those costs are hidden, because the prizes for a winning ticket only amount to a small fraction of total state revenue. And the rest of the costs are real, because they expose people to addiction and increase risk-taking behavior.

The practice of distributing property or goods by lot dates back to ancient times. In the Old Testament, Moses instructed his followers to divide the land by lot, and Roman emperors used it to give away slaves and properties. Privately organized lotteries were common in England and the United States before the Revolutionary War, and they were a way for merchants to sell goods for higher prices than could be achieved through regular sales. The Continental Congress voted in 1776 to establish a large public lottery to support the Revolutionary Army, but that plan was abandoned. Private lotteries continued to grow in popularity, and the Boston Mercantile Journal reported in 1832 that 420 had been held that year.

Most lotteries are based on a fixed prize pool. The value of the prize is determined before the drawing, and the number of prizes is limited by law to keep ticket prices low. Some lotteries also allow winners to choose their own prize or use a random selection process instead of the traditional method of choosing a winner.

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