The Regressivity of the Lottery

The lottery is an enormous industry, one that generates billions of dollars every year. For some people, winning the jackpot is a dream come true. But for most, winning the lottery is just an exercise in irrational hope. The odds are long and the payout is often smaller than advertised. And in most cases, the money isn’t even paid out in a lump sum — it’s often invested over time and taxed along the way.

Lottery commissions try to hide this regressivity by promoting two messages. One is that you should feel good about playing because you’re helping your state. That’s a great message, but it’s also a bit of a misleading one. Most of the money that comes from lottery tickets isn’t going to the state, it’s coming out of the pockets of lower-income players who spend a disproportionate amount of their income on tickets.

The other lottery message is that you should play because it’s fun and the experience of scratching a ticket is entertaining. That’s a fine message, but it too obscures the regressivity of the lottery. And it also ignores the fact that most of the time you don’t win, and if you do win, you’ll likely end up with less than what was advertised, especially after taxes. It’s important to understand all of these factors before you decide to play the lottery. And if you want to learn more, many states and private companies keep lottery statistics online.

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