Does the lottery do more harm than good?

Does the lottery do more harm than good?

360 shows you diverse perspectives on today’s top stories and discussions.

What is happening

Lottery officials announced Tuesday the purchase of a $2.04 billion winning Powerball ticket in Altadena, California.

The jackpot grew to such a staggering amount – more than $400 million above the previous record – over the course of several months after making 40 consecutive draws with no winning ticket. The winner, whose name has not yet been revealed, will have the option to choose to receive the entire $2 billion in annuity paid annually over 29 years or as a lump sum estimated to be worth less than $1 billion. Either way, they’ll have to foot a massive tax bill on the winnings.

The probability of winning any one Powerball ticket is estimated to be 1 in 292 million. But these long odds do not prevent Americans in the 45 states participating in the lottery from spending huge amounts of money in the hope of getting rich. In 2019, for example, more than $83 billion was spent on lottery tickets across the United States, according to the association that represents government lottery organizations.

A significant part of this money goes to prizes, while part of it is used to finance the operations of running the lottery. Each state also allocates a portion of the lottery proceeds to government spending projects. In many states, the money goes primarily to education. But it is also used to fund elderly support, environmental protection, construction projects, and support state budgets.

Lotteries have existed in America since the early colonies, and so has the controversy surrounding them. In fact, they were banned in all but a few states in the mid-19th century due to concerns about corruption, and there were no lotteries to operate legally in the United States for the entire first half of the 20th century.

Why is there a debate?

The modern version of the lottery is also a source of heated debate, with many experts seeing it as doing more harm than good.

Proponents of the lottery say that it benefits many more people than individuals lucky enough to own a winning ticket. They argue that lottery proceeds allow states to support important public programs that strengthen entire communities without having to raise taxes. For example, the California Lottery has given public schools more than $39 billion since its launch in 1985. Others assert that the lottery is harmless fun, giving players a chance to fantasize about what they can do with their fortunes even though they basically understand the odds of winning are zero. They say this experience alone is worth the cost of the ticket.

But critics of the lottery, many of whom would like to remove it, often argue that it acts as a tax on the poor due to research showing that lower-income Americans tend to play more and spend a larger share of their income on tickets than other groups. Others argue that the lottery preys on the desperation of people who have failed a system that has given them few real opportunities for economic mobility.

There are also many doubts about the usefulness of lottery money to the public. Research indicates that education money from the lottery often goes to schools in wealthy or middle-class neighborhoods rather than poor communities that contribute a disproportionate amount to lottery proceeds. There is also evidence that lawmakers often use lottery money to cover spending cuts, which means that budgets for things like education and environmental projects don’t actually increase.

What’s Next

Despite these objections, lottery games are still very popular with the American public. There have been some recent efforts to extend the lottery to the five states that currently do not allow it — Alaska, Hawaii, Alabama, Utah and Nevada — but local political opposition has stood in the way so far.

Outlook – Perspectives


The fun of playing is its own reward

For the average buyer, the obvious folly of hoping for one win out of 300 million is offset by the “psychic income” you get from $2. What is psychic income? Merriam-Webster defines it as: “Rewards (as in prestige or entertainment or pleasant environment) cannot be measured in terms of money or goods.” … In the case of a lottery ticket, psychological income comes in the form of two or three days of rich rewarding fantasies.” – Jeff Greenfield, Politico

Since people are going to gamble anyway, it’s best if it happens at state-sanctioned lotteries.

“The impulse to gamble seems to be ingrained in the human brain. … If people are so bent on dumping their money into the addictive shake-up of gambling, wouldn’t it be better for governments to run games and cut profits, rather than for example organized crime?” — ​​David von Drele, Washington Post

There is nothing improper in financing government projects through lotteries

Governments have long taxed vices in an effort to raise revenue, with the added justification that the resulting increase in costs for such activities might discourage them. And while gambling can turn into a socially harmful addiction, the ill effects of which are hardly nearly as exorbitant in their entirety as those of alcohol or tobacco, there are two other mischiefs that governments use to increase revenue.” — Lewis R. Humphreys, Investopedia

The lottery is harmless in relation to some other financial schemes permitted by the United States

“Is it wrong to play Arsenal? In the grand scheme of things, it is much less harmful than many other self-destructive things that people living on the edge often do, such as accumulating credit card debt, or exceeding their overdraft limit from Banks, or take out loans from payday lenders. If you don’t buy a lot of tickets, and that gives you some fun, it seems pretty harmless.” – George Lowenstein, CNN


Education budgets don’t actually grow because of the lottery

“Although states typically claim that lottery proceeds will go to education, the money can be exchanged: This income can simply be in place of public revenue that is used to fill in gaps elsewhere—in pension plans, for example. Evidence that the benefits of education are usually either small or illusory.” Bloomberg Editorial

The most enthusiastic lottery players are the hardest hit

Dreaming of how he’s spending fortunes after he takes taxes out of his own money may be a diversion, but this state-sponsored and state-promoted gamble encourages many Americans to dump money they can’t afford to lose. The profile of regular lottery buyers tends towards low-income families. Is this how we want to fund our government? — Editorial, New York Daily News

The false promise of lottery revenue makes it difficult to enact programs that will actually help people

“The lottery has made it more difficult than ever to pass on much-needed tax increases because, thanks to years of tumultuous campaigning followed by decades of intense promotion, the public mistakenly believes that schools and other vital services are generously subsidized by gambling money.” – Catherine Schulz, The New Yorker

The lottery moves wealth from poor communities to the suburbs

“An alarmingly high percentage of tickets, including daily number games and scratch-offs, are being sold in low-income neighborhoods, where the dire odds turn the lottery into a massive diversion of wealth in the wrong direction. Think of it as a kind of reverse Robin Hood mechanism, taking from the poor and give it to the rich (or at least the middle class).” – Baltimore Sun editorial

The Lottery Helps Cover Up How Our Society Has Failed Its Most Vulnerable Communities

Perhaps most disturbingly, the lottery presents the misconception that people can gamble their way out of poverty. This economic movement happens by chance. …this is completely counterproductive to the goal we must all share: to expand everyone’s economic mobility.” — Matt Rixrod, Sacramento PE

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Image caption: Yahoo News; Images: Getty Images

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