Lotteries are the state’s alternative to taxation for funding public services. In some states, they account for half of all public revenues. They are popular, and they have broad public support—sixty percent of adults play them at least once a year. But they also have powerful, specific constituencies: convenience store operators (who are the lottery’s usual vendors); suppliers to the industry (heavy contributions by them to state political campaigns are regularly reported); teachers (in those states where lottery revenues are earmarked for education); and state legislators, who quickly grow accustomed to the extra revenue. The modern lottery began in the nineteen-sixties, when growing awareness of all the money to be made in gambling collided with a crisis in state budgeting. With inflation rising and the cost of the Vietnam War soaring, it became harder and harder for most Americans to balance their state budgets without raising taxes or cutting state services.
The legalization of the lottery was a way to raise funds for those services while keeping taxes low. But the lottery was not a silver bullet; it would only cover one line item, usually a government service that was popular and nonpartisan, such as education, elder care, or public parks. Advocates of the lottery began promoting it not as a solution to the state budget problem but as a replacement for taxation altogether. The lottery was not just a good idea; it was a necessity.
People buy tickets for the lottery because they believe it’s an opportunity to change their lives. Some do this in a clear-eyed way, buying only those numbers they think will come up. Others do it in a more irrational manner, obsessing over “lucky” numbers and stores and times of day to buy them. The truth is, the odds of winning are long. But for many, the dream of a big jackpot is all that matters.
It may seem ironic that the lottery has become a popular alternative to taxation in a country that was founded by Puritans who resented all forms of gambling. But Cohen points out that early America was desperately short of money, and lotteries helped fill the gap. Harvard, Yale, and Princeton were financed through them, and Benjamin Franklin sponsored a lottery to fund cannons for the defense of Philadelphia during the Revolutionary War.
Today, the lottery is a massive industry. It’s worth about $80 billion a year, or a bit more than the GDP of Australia. But while it can give some people an undeserved sense of security, it is a risky and addictive form of gambling. Rather than spending your money on a lottery ticket, you should be using it to build an emergency fund or pay off debt. This will put you in a much better position should the lottery ever fail. Besides, if you do win, the tax bill will be enormous.