The Official Lottery

Lotteries are gambling games with a fixed prize, either cash or goods. The idea is that most people will be willing to hazard a tiny amount for the chance of something much bigger. This is a concept that dates back to the 15th century, when town records in Ghent, Utrecht, and Bruges refer to lotteries to raise funds for town fortifications or help the poor.

Lottery games are now offered by more than 50 states, and the prizes can reach into the hundreds of millions. Most lottery programs are managed at the state level, but two major lottery games—Mega Millions and Powerball—are so widespread that they effectively function as de facto national lotteries.

Super-sized jackpots drive sales, and they also earn the game a windfall of free publicity on news sites and TV newscasts. But these mega-wins can lead to disastrous financial consequences for some winners. Business Insider previously reported on the case of a man who won the Powerball and was forced to sell his house and relocate to Vanuatu, a South Pacific island. Another winner ended up blowing his winnings on a dream vacation and ended up in debt. Ultimately, both men were advised to assemble a “financial triad” to help them navigate the pitfalls of sudden wealth.

Lottery players are often from the 21st through 60th percentile of income distribution, which means they have a few dollars in discretionary spending but not much in the way of opportunities for the American Dream, entrepreneurship, or innovation. This may be a regressive form of taxation, but it’s hard to argue with the logic that some people should be allowed to gamble on the chance to become rich.