Profitable lottery is a common phenomenon in the United States. Lottery revenues generate billions of dollars each year, but that money does not necessarily benefit those who play. In fact, state lotteries may be worsening social inequality. Cohen describes how state lotteries grew in popularity in the nineteen-sixties, when awareness of all the money to be made in gambling collided with a crisis in state funding. As the population grew and inflation accelerated, state governments found it harder to balance their budgets without raising taxes or cutting services, which were deeply unpopular with voters.
The state lottery’s pitch was that if people were going to gamble anyway, the government might as well pocket the profits. It was a rationalization that had limits, but it provided moral cover for legislators who approved the practice. Lottery ads, the design of scratch-off tickets, and the math behind them are all designed to keep players hooked. It is not that different from what tobacco companies and video-game manufacturers do, only it happens under the aegis of the state.
Almost all lottery revenue goes to prize payouts, with a small portion spent on retailer commissions, administrative costs, and advertising. But the big chunk – $3.7 billion in the 2022 fiscal year — went to education, including special needs programs and school buildings. Other programs benefit seniors, veterans, breast cancer research, and first responders. And then there are the state income taxes, which vary by state but generally are withheld from winnings.