Regressive Impact of the Lottery on Low-Income Groups
The lottery is a game of chance in which participants have an equal opportunity to win a prize, typically cash. The winnings are awarded to the bettor whose numbers match those chosen in a random drawing, either at an official event or by electronic means. Each ticket carries a unique identifier that must be recorded in order to determine the winners. The identification system may take several forms: The bettor’s name and amount staked on the ticket; a numbered receipt that is deposited with the lottery organization for later shuffling, selection and possible drawing; or a unique set of numbers printed on the ticket. In addition to these elements, many modern lotteries use computer systems that record the identities of bettor and ticket number.
The fundamental premise behind the lottery is that the entertainment value of winning money outweighs the disutility of losing it. In this sense, the lottery provides an important public service. But the lottery also raises important ethical questions about state government’s ability to manage an activity from which it profits. In the case of the lottery, a major issue involves the regressive impact on low-income groups.
In most states, the lottery is run as a state monopoly. Unlike private companies, which would have to compete with other state-run lotteries, the state can set its own terms and conditions for entry, which in turn allows it to maximize revenues and limit losses. But these policies can have negative consequences, including for compulsive gamblers and poorer residents. The regressive impact of lotteries is one example of the difficulty in crafting coherent gambling policy at any level of government.
Lottery officials must balance the need for maximum revenue with the ethical challenges of promoting gambling. This tension is exacerbated by the fact that most lotteries are staffed with people who are paid a salary. As a result, they are prone to pressure from state legislators and governors to increase revenues. Moreover, the growth of lottery revenues usually begins dramatically, but then plateaus or even declines. This has forced lotteries to introduce new games in an effort to maintain or increase revenues.
A successful lottery must have a high volume of ticket sales, and this requires substantial advertising. But it is not clear that the lottery’s promotion of gambling is consistent with its stated public service mission. The biggest problem is that lotteries are marketing the idea that winning a big jackpot will radically transform your life. In an era of limited social mobility, this is a dangerous message. In addition, the large prizes draw attention to the lottery and drive more ticket sales. In the end, it is hard to imagine how a lottery can avoid the pitfalls of commercial advertising.
