The Official Lottery and State Budgets

A state lottery is a fixture of American culture. In 2021, people spent upward of $100 billion on tickets, making it the country’s most popular form of gambling. But what do those dollars mean for state budgets, and is it worth the gamble? In this week’s episode of “Official Lottery,” the Atlantic explores those questions with the help of experts in gambling, law and public policy.

Across the country, state legislatures have begun to legalize sports betting. Advocates for these new forms of gambling argue that they will be beneficial to states because they bring in revenue that can offset the loss from other sources. But the amount of money that sports betting brings in compared to broader state revenue is still relatively small. And while it may be tempting to use sports betting as an example of the dangers of unregulated gambling, state lotteries are much more common and have a longer history.

While the early defenders of the lottery argued that it was an alternative to taxation, it became increasingly dependent on taxpayers in its modern incarnation. Its sales increase as incomes fall, unemployment rises and poverty rates increase, and its advertising is heavily concentrated in neighborhoods that are disproportionately poor or black.

This dependence makes it vulnerable to exploitation, and a lottery’s critics are not afraid to point out its racial and economic prey. For example, a renowned scholar of poverty and inequality says that the lottery’s popularity in the United States is linked to the fact that many poor families live in areas with high exposure to lottery ads. The result is a financial exchange that “is mathematically stacked against the poor,” and in which players continuously pay into a system that will, for most, give them nothing back.

In other words, the lottery is an investment in a pipe dream that offers, at best, a sliver of hope. And while skeptics may be right to say that the odds of winning are long, for those who play it, that slim chance is enough to keep them playing.

New York state Senator Joe Addabbo is working to address one of the most insidious aspects of the lottery. He’s proposing to let winners of big jackpots keep their names private, a measure he originally proposed after 24 lottery winners came to him asking to do so. It would still require them to file taxes, go through a background check and complete the same paperwork required of all winners, but it’s an important step in limiting harassment for those who have won large prizes. For now, he’s urging winners to be suspicious of any communication that asks them to wire money or provide personal information. Those requests are a sure sign of fraud.