Public Benefits of Lottery


Lottery is a game in which people try to win money or other prizes by drawing lots. Traditionally, lottery players would write their names and numbers on slips of paper which were then collected for shuffling or some other randomizing procedure, with the winners being selected by chance. In modern times, computer technology has replaced these traditional means. In some cases, the winner is determined by the number of tickets matching the winning combination; in others, the winners are chosen by randomly selecting a subset of the total population of participants. The prizes offered by lotteries can vary from cash to goods and services, and the size of the prize pool can increase or decrease the popularity of the lottery.

In the past, a large part of the proceeds from lotteries went to public service projects. For example, in colonial America, lotteries helped to finance roads, libraries, churches, schools, canals, and bridges. Many of these projects were built to help the poor. In addition, some of the lotteries financed private ventures such as land grants to settlers.

Today, the vast majority of the money that is raised by state lotteries is allocated to education. The rest of the money is allocated to a variety of different beneficiaries. Some states use it to pay off a portion of their debts; other uses include public safety programs and infrastructure investments such as roads, schools, and hospitals. In 2006, the states took in a combined $17.1 billion from lotteries and allocated them to various purposes, as shown in Table 7.2.

While the purchase of lottery tickets cannot be explained by decision models based on expected utility maximization (since the ticket costs more than the potential gain), it may be justified under more general utility functions that take into account risk-seeking behavior. This is especially true if the lottery tickets provide entertainment value and/or the opportunity to indulge in fantasies of wealth.

Moreover, the existence of large jackpots can attract buyers by giving the impression that there is a good chance of winning. This is especially the case when the jackpot grows to apparently newsworthy amounts, a phenomenon known as “jackpot envy.” Finally, some buyers purchase lottery tickets for the religious reason that God wants us to earn our wealth by hard work: “Lazy hands make for poverty; diligent hands bring wealth” (Proverbs 23:5).

Regardless of why they buy, however, there is one thing that all lottery buyers have in common: the desire to hope for the best. In this way, the lottery provides a source of comfort for people who do not have much else to hope for in their lives. This hope, as irrational and mathematically impossible as it is, can be very valuable for some. For these people, the lottery is not just a game, but a way of life. This article was originally published in the February 20, 2019 issue of Fortune. Copyright Fortune, 2019. All rights reserved. Reprints must include a link to the original article and cannot exceed 600 words.