What is the Lottery?

What is the Lottery?


The lottery is a game in which people pay money for the chance to win a prize based on the outcome of a random drawing. In some cases the prize is cash; in other instances the prize is goods or services. Lotteries are usually run by governments or private entities, and may be public or charitable. Historically, the prizes for lotteries have been very large, but in recent years they have become smaller and more likely to be based on goods or services rather than cash. Some of these prizes are offered only to people who play the lottery; others are given away as part of a promotional campaign.

The most familiar type of lottery is the financial lottery, in which people buy tickets for a small sum of money for the chance to win a big jackpot. Financial lotteries are generally not regarded as being addictive, but they do contribute to the overall gambling problem and they do raise revenue for charities and government programs. The financial lottery has also become a major source of funding for public-works projects.

Cohen argues that the modern incarnation of the lottery began in the nineteen-sixties, when rising awareness of all the money to be made in the gambling business collided with a crisis in state funding. With population growth, inflation and the cost of the Vietnam War soaring, balancing state budgets became increasingly difficult. Raising taxes or cutting services was unpopular with voters, and so many states turned to the lottery for help.

In some countries, including the United States, winners are allowed to choose between receiving their prize in one lump sum or as an annuity over three decades. People who choose the lump sum expect to pocket the advertised prize amount right away, but withholdings (taxes that are withheld from each annual payment) will reduce the actual amount they receive. Depending on the laws of the jurisdiction in which they live, winnings can be subject to income tax, capital gains tax and other taxes, all of which have a negative effect on the final amount received.

Defenders of the lottery argue that people who play it rationally choose to combine the entertainment value of the ticket with their expectation of a high chance of winning. They also point out that rich people spend far less of their income on tickets than do the poor. But, as Cohen points out, lottery purchases are responsive to economic fluctuation, and sales increase as job security and wages erode and poverty rates rise. Moreover, advertising for lottery products is often concentrated in neighborhoods that are disproportionately poor, black, or Latino. These facts suggest that playing the lottery is, at least in part, a form of class warfare.