Profitable Lottery Profits

profitable lottery

As much as the lottery entices us with its promises of instant riches, we should consider that we might be playing into the hands of nefarious lottery operators. While a small portion of each ticket sale goes to retailers who distribute the tickets, the majority of lottery revenue is funneled into one pool that includes commissions for retailer and overhead for the state government that runs the system itself. That pool then redistributes to cities and towns that benefit from the lottery’s success.

Lottery profits started climbing in the nineteen-sixties as states struggled to balance budgets that supported a growing social safety net without raising taxes or cutting services. The appeal of the lottery was that it could snag enough revenue to cover state costs without infuriating anti-tax voters.

Super-sized jackpots boost lottery sales by making the games seem newsworthy and earning them free publicity on TV and news sites. But the money that’s pumped into the prize pool is also siphoned away by hefty commissions for retailers and other fees.

The rest of the funds go to lottery expenses, like printing tickets and administrative costs. A smaller amount also goes to winners who can expect to pay a percentage of their winnings in taxes, though two states don’t tax their prize checks at all.