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What is the Lottery and How Does it Affect Your State?

What is the Lottery and How Does it Affect Your State?

Lottery is a method of distribution of prizes (money or goods) by chance. The earliest documented lottery-like events were held in the Low Countries in the 15th century to raise money for town fortifications and to help the poor. Modern lotteries are often referred to as “gambling” but, under the strict definition of gambling, payment of a consideration (property or work) must be made in order for an individual to have a rational opportunity to win a prize in a lottery.

For many lottery players, the entertainment value of winning and the non-monetary benefits that come with it outweigh the disutility of losing. However, the fact that most lottery tickets are bought with a state’s money obscures how much people lose. And while the amount of money states collect in lottery ticket sales may seem large, when compared to overall state revenue it is actually quite small.

To keep lottery sales robust, state governments must pay out a significant portion of the proceeds in prize money. This reduces the percentage of lottery revenue available for general government uses, such as education, which is the ostensible reason for states to operate lotteries in the first place.

So, what’s the solution? States need to send a different message to lottery players. In particular, they need to stop using the message that a lottery ticket isn’t a big waste of money because it raises funds for the state. That message obscures how much people lose and doesn’t adequately explain why so many play.