The "what I'd do if I won the lottery" game is a fun one. You get to make up a little dreamland where you are suddenly awash in unimaginable riches. Your biggest problems become figuring out where to buy your second mansion, picking out your yacht, and finally cutting off that one family member who's a real leech. It's a fantasy so good it might even make you buy a ticket.
The exercise can also be a trippy one. You know you're not going to win. Really. Except maybe there's a small sliver of hope that you will. I mean, somebody has to win, right? The ugly underbelly here is that sneaking feeling that the lottery, however improbable, may be your only way up. What does it mean when the longest of shots is the only one people feel they've got?
The lottery is a fixture in American society. People in the US spent upward of $100 billion on lottery tickets in 2021, rendering it the most popular form of gambling in the country. States promote lottery games as ways to raise revenue — that ticket bought at the gas station isn't a giant waste of money, it's actually a way to save the children. But just how meaningful that revenue is in broader state budgets, and whether it's worth the trade-offs to people losing money, is debatable. I'm not saying the lottery is evil, but its costs merit scrutiny.
America's lottery bonanza is the subject of For a Dollar and a Dream: State Lotteries in Modern America, by Jonathan D. Cohen. I recently spoke with Cohen, a historian and program director of American Institutions, Society, and the Public Good at the American Academy of Arts and Sciences, about the proliferation of lotteries in the US in the late 20th century and what makes states and players tick. Our conversation, edited for length and clarity, is below.
So what's the "that's how they get you" on lottery tickets? How does it get us?
A lot of people plain old like to gamble, and it's sort of as simple as that. There is, to some degree, this inextricable human impulse to play. But then there's a lot more going on that lotteries are doing, the big one being that they are dangling the promise of instant riches in an age of inequality and limited social mobility. They know exactly what they're doing with billboards on the side of the highway with the Mega Millions jackpot and the Powerball jackpot. All it has to say is the size of the prize, and they know they have folks.
There are other things they do around the edges to keep people hooked, but the big one is dangling the promise of wealth for all players of all backgrounds.
So, the size of the prize matters more than the fact that I know deep down I'm not going to win the lottery? I guess the Powerball jackpot gets to a certain level and I think, well, might as well buy a ticket.
There's a classic study of people's overestimation of the odds of good things that can happen to them and an underestimation of the bad things. That's combined with the fact that it's really easy to tell the difference between a $4 million jackpot, a $40 million jackpot, and a $400 million jackpot, but it's basically impossible for the brain to fathom the difference between the odds of one in 4 million and one in 40 million or one in 400 million. A one-in-4-million prize already seems so impossible and fantastical that it might as well be one in 400. The actual odds do make a huge difference, but it just doesn't feel that way because the initial odds are already so fantastic. That couples with this meritocratic belief that we're all going to be rich someday.
People think winning the lottery is meritocratic? Wouldn't it be the opposite?
A lot of lottery winners will say, "Oh, I just got lucky and I hit the jackpot." But a lot of people want it to signify something about them and in the process are willing to take the lottery, which is the quintessential vehicle of chance, and say, "Oh, it's God. Oh, I deserved it."
There was a recent news story about a woman who basically bankrupted herself to pay for her daughter's cancer treatment and then she won the lottery. There's an implication that someone like that "deserves" to win and that her win is a reward for the way she was living. It's chance, of course, but we want to believe that people get their due. That's also why we have this myth of the miserable lottery winner, which is total BS.
Wait, what's the miserable lottery winner myth?
It's that myth that all lottery winners end up broke and that they don't know how to handle their money and they're miserable and they're all dead within five years, and it's just not true. Lottery winners just in general are objectively happier than the rest of us. There are a handful of outstanding cases — like, five, and I know their names — of winners who lost all their money.
To shift a little bit, why is the lottery in modern-day America allowed? How did we wind up with this?
There is a historical story of circumstances in the mid-20th century that created states' need for revenue that compelled them to enact lotteries; that's one side of the story. And the second side is this belief that gambling is inevitable, that people are always going to play, and therefore the state might as well offer it to make money. But by offering the games, you are just creating more gamblers and enticing more people to play. You are not just capturing this inevitable gambling; you're creating new generations of gamblers.
Why did states need money, and why was this the decision that this is the way for states to make money?
The immediate post-World War II period was one where states could expand their array of services without especially onerous taxes on the middle class and the working class. By the 1960s, that arrangement began to crumble to a halt because of inflation, because of the cost of the Vietnam War. Lotteries started in the Northeast, states with larger social safety nets that maybe needed extra revenue. They saw the lottery not as a nice little drop in the bucket of state government but as a revenue source that would help get rid of taxation for the rest of history because it would make so much money. It was a belief inspired by all the illegal gambling that was happening at the time. It was gambling that was happening anyway, so let it fund the government. That's the first wave.
Then there were just continued budget crises at the state level going into the '80s and '90s, especially when it came to education funding in states like California. States have very, very few ways to raise extra revenue without taxation. The lottery, now sports betting, too, and gambling in general is one of those few ways. Once a neighboring state enacts a lottery, it's like all right, we might as well do one, too. All of a sudden, in the span of five-plus decades, we have 45 lottery states.
Is lottery revenue really significant revenue for states?
You can read the complete interview here.
