a game or method of raising money in which tokens or pieces of paper with numbers on them are sold and the winning ones are chosen by lot in a random drawing. Prizes range from cash to goods or services. Generally, the value of the prizes are set ahead of time and a percentage of the proceeds is usually donated to charitable causes. The word is derived from the Latin lottery, meaning “to cast lots,” or “a choice by chance.”
A lottery can be played individually, with each person buying their own ticket; it can also be played collectively, in a group. It may also be organized as a public service by a government agency, in which case the proceeds are often used for a specific purpose. In the United States, most state governments sponsor a lottery.
In the immediate post-World War II period, states found themselves expanding their array of social safety nets, and they figured that lottery games were a great way to generate revenue without creating especially onerous taxes on the middle class and working classes. They figured that people would always want to gamble, and that it was the right thing for states to offer them a chance to do so.
But there is a deeper problem with this logic: the lottery games themselves are a form of taxation. Even if the prizes are small, the odds of winning are extremely long. This creates a kind of hidden tax, whereby the state subsidizes gambling by providing the opportunity to win large sums of money. This subsidy is particularly pernicious because it is not only unequal, but it distorts the incentives of individuals and societies.
It’s easy to see how this happens: People are enticed by the huge jackpots advertised on billboards, and they spend a substantial portion of their income on tickets. In fact, they spend more on lottery tickets than they do on medical insurance and education combined. Lottery commissions understand this, and they promote the game by presenting it as a form of entertainment that is fun to play, and by emphasizing the benefits that are supposedly available to players who are committed to playing regularly.
This distortion obscures the regressivity of the lottery, and it gives people the impression that they are not being taxed unduly when in fact they are spending a significant portion of their incomes on something that offers no social benefit at all. It’s a classic form of rent-seeking.
There is, of course, an inextricable element of human nature that makes us all love to gamble, but the lottery, whether we play it or not, is a corrosive tax on our economy and a corrupting influence on society. And the wacky slogan, Life’s a lottery – are you in it?, is just a euphemism for life’s a crapshoot. The truth is, it’s a rigged game. You have to pay to play, and you have a very low chance of winning.