Lottery Winners Are Affluent and Influential

A lottery is a system of distributing prizes by chance among persons purchasing tickets or chances. The first recorded lotteries to sell tickets offering a cash prize appeared in the Low Countries in the 15th century, and town records show that they were used for purposes such as helping the poor or financing town fortifications. Today, lottery games are found in almost every state and account for some 50 percent of the nation’s gambling revenue. Most of the money comes from a player base that is disproportionately lower-income, less educated, nonwhite, and male. These groups also tend to play a lot more frequently, and for longer periods of time, than other lottery players.

Lottery games are based on the idea that human beings have a basic urge to gamble. People play because they believe that there is some small chance that they will win a big prize. In fact, the odds are very much against them, and yet they continue to buy tickets, spending billions of dollars annually in the process. Moreover, many of the same people who believe in this “one-in-a-million” chance also claim to have quote-unquote systems of playing, such as buying tickets at certain stores or times of day and following specific types of numbers.

Despite their inherent regressivity, there is something in the American spirit that draws people to lottery games, which are a major source of national income and consumption. In addition to their regressive nature, they also create a peculiar class of “lottery winners” who are affluent and influential.

In early America, lotteries were tangled up in the slave trade and often posed moral problems. George Washington managed a lottery in Virginia that included slaves as prizes, and one enslaved man, Denmark Vesey, bought his freedom with the help of a lottery prize in South Carolina and went on to foment a slave rebellion. But lotteries were a mainstay of colonial finance, and helped fund everything from roads to libraries and churches.

For politicians confronting budget deficits, lotteries were a kind of “budgetary miracle,” according to Cohen, appearing out of thin air and freeing them from the prospect of raising taxes. They promised a way to maintain services without the political risks associated with tax increases, and they could do so by tapping into the public’s appetite for gambling. In the end, however, it was the regressivity of lottery winnings and their effects on society that finally brought them to a stop. But not before accumulating immense sums of money for a few lucky individuals. Many of those who won, like the late Steve Wynn, have since left a mark on the casino industry and beyond. Some have even gone on to run for the presidency. But as a source of public finance, lottery is no longer a panacea, and the regressivity of its jackpots makes it an unwise policy for a modern economy. A new approach is needed. A lottery can still raise a lot of money, but only if it’s reformed to put the public interest first.