Is the Lottery a Good Deal for Taxpayers?

A lottery is a form of gambling that involves drawing numbers for prizes. In the United States, state governments typically oversee lotteries that offer a wide range of prizes from cash to goods and services. Some states even allow people to invest in annuities, which pay a series of annual payments for decades. The winner can also choose to take a lump sum payment. Historically, people have been willing to hazard a trifling sum for the chance of considerable gain. Benjamin Franklin organized a lottery in Philadelphia to raise money to purchase cannons for the city’s defense, and George Washington’s Mountain Road Lottery sold land and slaves as prizes.

While most lottery players know the odds are slim, they still buy tickets. Why? Because they get value out of the experience. The hope that they’ll win, as irrational and mathematically impossible as it may be, provides them with some sense of self-worth, particularly for those who don’t have a lot of other options for making money or getting ahead in life.

In the immediate post-World War II period, many state leaders saw lotteries as a way to expand government social safety nets without significantly raising taxes on poor and working class families. But, that arrangement began to crumble when inflation pushed the cost of government ever higher. Now, the big question is whether the lottery really is a good deal for taxpayers—and what the consequences might be of expanding it to sports betting.