Lottery is a form of gambling that awards prizes to players based on randomly selected numbers. Prizes can be anything from a small amount of money to subsidized housing units or kindergarten placements at a public school. The odds of winning vary wildly, depending on how many tickets are sold and how many numbers are drawn. In 2021, Americans spent upward of $100 billion on lottery tickets. State governments promote the games as a source of “painless revenue,” arguing that people are voluntarily spending their money for the benefit of the public good.
But this narrative obscures the true cost of the games. Instead, they are a massive regressive tax on poorer residents and contribute to the spread of harmful gambling behaviors.
Most states use a small portion of the proceeds to cover administrative and vendor costs, while the remainder is divided up amongst projects that are designated by state legislatures. Some allocate all the lottery money to education, while others put it toward a variety of other social services. The North American Association of State and Provincial Lotteries provides an overview of each state’s allocations.
But it is important to keep in mind that even the most generous allocations do not come close to addressing all of the lottery’s costs. The biggest cost is the money that state government spends to pay for the program, which may not be offset by the higher taxes and reduced spending from lottery ticket sales.