Three Disadvantages of the Lottery
Lottery is a form of gambling where participants pay to play for the chance to win a large sum of money by matching a series of numbers. Lottery games can be found in many forms, including state-run, multi-state games such as Powerball and Mega Millions, and private, privately run games such as those used to decide unit allocations in subsidized housing or kindergarten placements.
While most people who play the lottery do so for entertainment, it is also an exercise in a type of irrationality: the human mind is prone to believing that something as improbable as winning a big jackpot will somehow happen, even though we all know better. While the lottery appeals to our tendency to dream big, it has three significant disadvantages that should be considered before players purchase their tickets.
The first issue is that lotteries are, by their nature, regressive: those who have less money to spend tend to participate at disproportionately higher rates than those with more wealth. As a result, they contribute a significant portion of lottery revenues despite being less likely to be the winners. This is a major problem in an era where states are trying to balance their budgets while competing with the public’s desire to avoid paying taxes.
Another problem is that lottery marketing often deceives players. The fact is that most of the advertised prizes are essentially intangible, and the odds of winning are so low that the payouts are often not worth the investment. Moreover, the money won by lotto winners is often paid in installments over time, meaning that inflation and taxes will significantly reduce the actual value of the prize.
Finally, lotteries are expensive for state governments to run. The cost of promoting and running the game is significant, as are the administrative costs of collecting and dispersing the winnings. In addition, critics argue that the reliance on lottery revenue has shifted the focus of state government away from more pressing issues and created a dangerous dependency for future funding.
Brian Martucci writes about credit cards, banking, insurance and travel for Money Crashers. He’s also a regular contributor to the Consumerist blog at The New York Times. When he’s not writing about time- and money-saving strategies, you can find him exploring his favorite trails or sampling a new cuisine.
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The original version of this article appeared in the April 29, 2011 issue of The New York Times Magazine. Copyright 2011 The New York Times. This material may not be published, broadcast, rewritten, or redistributed.
The word “lottery” probably derives from the Dutch noun lotte, meaning fate or fortune, and is related to Middle Dutch loterie, which refers to a drawing of lots. Various types of lotteries have been in use since ancient times, and the practice continues to be popular around the world. It is especially common in the United States, where it raises billions of dollars each year and has played a role in decision-making processes such as sports team drafts and the allocation of limited medical treatments.
Lottery is a form of gambling where participants pay to play for the chance to win a large sum of money by matching a series of numbers. Lottery games can be found in many forms, including state-run, multi-state games such as Powerball and Mega Millions, and private, privately run games such as those used to…