The Hidden Tax of Lottery

Lottery offers people a chance to fantasize about winning a fortune for the cost of a couple of bucks. That’s fine for some people, but for others – often those with the lowest incomes — playing can be a major budget drain. Studies have shown that lottery players are disproportionately from lower-income groups, and critics say the games function as a hidden tax on those least able to afford it.

Until recently, most state lotteries operated like traditional raffles, with the public purchasing tickets in advance of a drawing weeks or months away. But new innovations – including instant games and scratch-off tickets – have transformed the industry. These tickets are cheaper and offer smaller prizes, and the odds of winning are much more favorable – on the order of 1 in 4. The popularity of these games has led to explosive growth in lottery revenues, which have subsequently leveled off and even started to decline. This is partly due to the boredom factor, which has led lotteries to introduce a constant stream of new games in an attempt to keep revenues up.

The word “lottery” is derived from Middle Dutch loetje, or lot game, and means “divvying up property by lots.” Casting lots to determine fates has a long history, and the practice was a popular dinner entertainment at the Saturnalian feasts held by Roman emperors. In colonial era America, lotteries were a common way to raise money for private and public ventures, including roads, libraries, churches, canals, and colleges. George Washington sponsored a lottery in 1768 to help fund his expedition against the French.