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There’s a certain, inextricable human impulse that drives people to gamble. Lotteries are a particularly potent form of that temptation because they promise the possibility of instant riches in an age of inequality and limited social mobility. That’s the message that’s been hammered home by billboards all over America, offering up the enormous Mega Millions and Powerball jackpots.
In the eighteenth and nineteenth centuries, lotteries played a vital role in building a new nation, when its banking and taxation systems were in their infancy. Founders like thomas jefferson and benjamin franklin saw the value in lotteries, which could raise money for a wide variety of public usages—roads, canals, libraries, churches, colleges, and more.
Today, lotteries are largely a source of revenue for state governments, and they are often touted as an alternative to raising taxes. But when you look at it in the context of overall state revenue, the benefits are small: on average, only about 40 percent of the money collected by a lottery goes to support the prize fund. The rest goes to the retailer, administrative expenses, and marketing costs. That’s not a great deal of incentive to encourage people to gamble, especially since most states’ total annual income and expenditures are far higher than the amount they collect from lotteries.