Purchasing a lottery ticket seems like a low-risk investment: It costs only $1 or $2, but you could potentially win millions of dollars. That’s why lottery players make up a sizable share of government receipts, even though their chances of winning are small. The $70 billion Americans spend on the lottery is money that might otherwise be saved for retirement or paying down credit card debt, and it’s not going to a lot of good places.
State lotteries bring in over $100 billion per year, and the vast majority of that amount comes from selling tickets. The profits from the tickets are then funneled into a single pool that gets shared among winners, with each state getting its own proportion based on how much it sold. While this system is easy to administer, it’s not a very good business model.
Lottery supporters argue that the games help governments address gambling addiction and are a painless alternative to raising taxes, while critics point out that the huge jackpots don’t actually generate much profit for the states—and instead create a windfall of free publicity on news sites and television shows. It’s also not clear that the money really helps states cope with addiction or meet other goals.
Some state governments allocate a portion of lottery funds to addressing addiction, and many put a percentage into general funds to use for public works or education. However, research has found that in almost every case, the lottery funds do not increase appropriations to education, and the amount of money that is used for these purposes decreases from other sources.