What is a Lottery?

Lottery is a game of chance where multiple people buy tickets for a small amount in order to have a small chance of winning a large sum of money, sometimes running into millions of dollars. Often run by state governments, lottery is one of the most popular forms of gambling. It is also one of the most controversial.

This short video explains the basics of a lottery in a way that is accessible to children and teens. It could be used in a classroom or homeschooling setting as part of a Money & Personal Finance lesson.

Lotteries have a long history. They first emerged in the Roman Empire, where they were a form of entertainment for wealthy dinner guests. Each ticket holder would have the opportunity to win a prize in the form of a piece of dinnerware, for example. Privately organized lotteries were also common in the United States, and helped to fund several American colleges, including Harvard, Dartmouth, Yale, King’s College (now Columbia), William and Mary, Union, and Brown.

In the late twentieth century, a new type of lottery rose to prominence: state-run lotteries. Designed to be a low-risk, virtually no-tax revenue source in an era of anti-tax revolts, they became wildly popular. But as lottery revenues rose, critics pointed to their regressive impact on lower-income communities and the fact that they promoted compulsive gambling.

To counter these criticisms, advocates of legalized lotteries began to change their pitch. No longer claiming that they could float a state’s entire budget, they focused on a single line item, often education but sometimes something else, such as elder care or public parks, and promised that the proceeds from the lottery would be dedicated to that specific service. That narrower argument proved more effective in winning voter support, especially among conservative voters.

But there are still a number of problems with this approach, most importantly the question of whether it makes sense for government at any level to promote a gambling activity from which it profits and then be dependent on those profits. Is it appropriate, in an era of declining income and increased inequality, for government to be spending so much time promoting a speculative game that so many people play and lose?

It’s difficult to answer this question, because the truth is that most people who play the lottery play for a mixture of reasons. They may believe that they are a “good citizen” who is doing their civic duty by supporting their local schools; they may enjoy the thrill of buying a ticket and hoping for a big payout; or, as many studies have shown, they may feel that it is simply part of their DNA to gamble. Regardless of the motivation, however, it is clear that the lottery carries with it some dangers that are important for policymakers to consider carefully. The first of these is its implicit promise of instant wealth. It’s an appealing message in an age of increasing social inequality and limited opportunities for upward mobility.