The profitable lottery is a multibillion-dollar wealth transfer from poor communities to multinational corporations and retail stores that make up the majority of ticket sellers. That transfer has also helped state lotteries become the fastest-growing source of government revenue in recent decades.
New York, the largest and most profitable lottery in North America, raised $3.6 billion in fiscal year 2021-22 for education. Unlike most states, which allocate some of those profits to specific school districts, New York’s money goes directly to schools across the state. That means that larger, lower-income schools get proportionally bigger shares of the money.
Profitable lottery has been driven largely by the rise of companies that service state-backed lotteries and have taken over many of the jobs once done by government workers, according to a Duke University professor who studies how state lotteries operate. Scientific Games, for example, sells state-backed lottery systems and prints instant tickets in nearly all states, plus Washington, D.C. It is a privately owned company controlled by Brookfield Business Partners LP, an investment firm led by billionaire Bruce Flatt, the 622nd-richest person in the world, as of this writing.
In addition to the commissions that retailers receive from selling lottery tickets, they can earn substantial bonuses when someone wins a prize. But the Howard Center analysis of mobile-phone location data shows that retailers that sell lotteries are disproportionately concentrated in low-income neighborhoods. State-commissioned surveys that report the percentage of each demographic group that “participates” in the lottery often obscure this concentration.