Lottery has become the most popular form of gambling in America, with people spending upwards of $100 billion on tickets. It’s marketed as a fun, harmless activity that gives people a chance to fantasize about winning millions at a price of only a few bucks. But that message obscures the regressivity of lottery games. It also obscures that state governments aren’t gaining much in the way of benefits from the revenue they bring in through ticket sales.
The earliest examples of lotteries in the modern sense of the word can be traced to 15th-century Burgundy and Flanders with towns raising money for fortifications and aiding the poor. Francis I of France began to organize public lotteries in the 16th century.
Most states allocate some percentage of ticket revenue to prizes, with the rest going toward administrative and vendor costs as well as the projects each state designates. The prize money for a particular lottery can vary wildly, as can the odds of winning a given jackpot.
Winners may be offered an option of receiving their prize in one lump sum or over a set number of years as an annuity. If they choose the lump sum, federal tax withholdings can leave them with only about three-quarters of the advertised jackpot. Adding in state and local taxes can reduce their totals even further. It’s no wonder that those on lower incomes make up a large percentage of lottery players. The only way that many of them can afford to play is by using their meager savings or credit card debt.