While the financial lottery is not as popular as it once was, the game continues to lure millions of people into spending billions of dollars they could have saved or invested. Lottery marketing campaigns expertly capitalize on the fear of missing out – FOMO. They present the purchase of a ticket as a minimal investment with a potentially massive return, reducing the risk and magnifying the reward. The message, according to consumer psychologist Adam Ortman, is meant to trigger the human desire to not miss out on something that could dramatically improve their lives.
Historically, the principal argument used to promote state lotteries has been that they represent a painless source of revenue, where players are voluntarily spending their money (as opposed to being taxed) for the benefit of the public good. In the anti-tax era, politicians are keen to embrace such “painless” revenues. This dynamic explains why lottery advertising is so relentless, attempting to convince the public that a few dollars spent on a ticket is not only worthwhile but an excellent opportunity to support education, veterans’ health care, and other government programs without increased taxes.
But the truth is that state lotteries are a form of gambling, and a very expensive one at that. In the US, the average household spends more than a quarter of its income on tickets. Many of those dollars are diverted from savings, retirement accounts, and other investments that could have a much greater long-term impact.
A large portion of lottery proceeds gets paid out as prizes, but the rest goes to state governments, retailers that sell tickets, and to lottery administrators for administrative costs. The state governments often also keep a percentage for advertising. The remainder of the proceeds is used for a variety of purposes, including to fund other state programs and gambling addiction treatment services.
Once the games are established, lotteries grow rapidly. But they eventually plateau, and are forced to introduce new games in order to maintain or increase revenues. The introduction of the new games is usually accompanied by an intensified effort to advertise them.
As new games are introduced, the promotional emphasis shifts away from the promise of big prizes to the idea that playing the lottery is a fun activity that can be enjoyed by anyone. This is a cynical ploy that obscures the regressive nature of the game and the fact that most players spend a significant share of their income on tickets.
As state lotteries continue to expand, they have become extremely regressive and will likely remain so for the foreseeable future. While it is easy to blame millennials and other neoliberal critics for this trend, the reality is that the vast majority of lotteries are played by the poorest members of society, who see them as their last, best or only chance to break out of their disadvantaged circumstances. This hope, as irrational and mathematically impossible as it is, provides a tremendous amount of value to these players.