Profitable Lottery Profits – How Profitable Lottery Profits Benefit State Governments

profitable lottery

Whether you’ve won the Powerball or just gotten lucky at a scratch-off game, there’s no doubt that a portion of your winnings goes to the lottery system. The system employs people to design the games, record the live drawings, keep the websites up and running, and work at the lottery headquarters — all of which come with overhead costs. The rest of the money, outside of what you win, ends up back in the state’s general fund. States have complete control over how that money is used, though some put a significant amount into things like supporting gambling addiction and recovery centers, lowering property taxes, or simply adding funds to the general budget for roadwork, police forces, education and other social programs.

The big winners in this equation, however, are the state governments. They get 44 cents for every dollar that ticketholders spend, and the state lottery is often the largest contributor to a state’s revenue. In fact, in many cases state lottery profits exceed the revenue from corporate taxes.

This is partly because of the allure of super-sized jackpots that drive ticket sales and earn the games a windfall of free publicity in news reports and on television shows. But it’s also because lotteries dangle the dream of instant riches, in an era of limited social mobility and growing inequality. It’s an enticing fantasy, and one that plays on our deep-seated irrational urge to gamble.