The lottery is a popular form of gambling in which numbers are drawn to determine winners. The prizes are usually large amounts of money, but the odds of winning are quite low. Some people play for fun, while others believe that winning the lottery will solve all their problems. However, it is important to understand how the lottery works before playing it.
In the early years of legalized lotteries, advocates proclaimed that they would fill state coffers without arousing the nation’s late-twentieth-century tax revolt. They were right, but only to a point. The first legalized lotteries gathered about two per cent of state operating revenue. In fact, as Cohen shows, the money did not float most of the business of running a state, and it never did, even in New Hampshire, where proponents imagined revenues in the hundreds of millions of dollars.
Instead, the proceeds of the state lotteries were devoted to specific line items in the budget, largely government services that were both popular and nonpartisan—usually education, but also elder care, public parks, and aid for veterans. This more narrow approach made it easier to sell the lottery to voters. As it became clear that the lottery was not a silver bullet, supporters ginned up other strategies.
To begin with, the lotteries needed a pool of money to draw from. That pool had to be big enough to attract players, but not so large that it drained state budgets. In addition, it had to cover the costs of promoting and organizing the lottery, as well as the profit that the state or its private sponsor expected to make. The remaining balance was then available for the prizes.
Ticket sales were also an issue. Many states used a technique called “split-ticketing,” in which tickets are sold for fractions of the total prize. Each of these fractions, or “shares,” cost slightly more than the price of a whole ticket. Moreover, some of the share money went to agents who purchased whole tickets at a premium or discounted price. This was not unlike the way in which tobacco companies and video-game manufacturers marketed their products.
Lotteries also had to be able to attract wealthy customers, who were thought to spend much more than the poor on tickets. But this proved difficult, especially as the games began to resemble one another. In a series of articles, Cohen describes how the lotteries reshaped themselves to meet the needs of their wealthy patrons.
In the end, they offered lower odds and smaller jackpots but still attracted the rich. In the United States, for example, the top income brackets spent an average of one percent of their income on tickets, while those making less than fifty thousand dollars spent thirteen per cent. Those numbers reflect the fact that most states have a single game and the fact that the odds of winning are very low. As a result, the richest winners tend to be lottery syndicates, not individual players.