The Problem With Lottery Boredom

Lotteries are a form of gambling wherein people purchase tickets to win a prize, usually a sum of money. They have been around for centuries, used in everything from dividing land among Hebrews to distributing slaves. They also appear in the Bible and ancient Roman literature (Nero liked them, for example). In modern times, the popularity of state lotteries rose in the 1960s, as states faced a funding crisis in the wake of inflation and the Vietnam War. These governments were reluctant to raise taxes or cut services, so they turned to the lottery to generate revenue.

Lottery supporters have emphasized the game’s value as a “painless” source of revenue, because voters are voluntarily spending their money for public goods. But this claim is deceptive. Lottery revenues are highly variable, soaring at first and then leveling off. The reason? A large portion of the money spent on tickets is profits for the promoter and other expenses. This leaves a relatively small pool of prizes, typically in the 10s and 100s of dollars, with odds of winning on the order of one in four. This leads to a classic problem: the development of lottery “boredom.”

As with all forms of gambling, the lottery is often associated with moral issues, including the risk of compulsive gambling and the regressive effects on lower-income groups. But the bigger issue is that lottery operations are largely structured and run as a business, with a focus on maximizing revenues. As such, they are at cross-purposes with the state’s broader public interest.

Cohen provides a rich historical background, but the heart of his book lies in the nineteen-sixties, when the lottery’s rise collided with the nation’s tax revolt. At the same time, the social safety net of most American states began to strain under the weight of a growing population and rising inflation, making it harder to balance the budget without raising taxes or cutting services. In this environment, the lottery was hailed as a solution, especially in the Northeast and the Rust Belt.

As a business, a lottery needs to increase ticket sales in order to maintain or even grow its revenues. To do this, it must introduce new games to entice players, and it must advertise. The result is that state-run lotteries are promoting gambling and chasing short-term revenues. As a result, they may be contributing to problems such as poverty and crime. The question is whether this trade-off makes sense. To answer this, we must consider a simple economic question: Does the entertainment value of playing the lottery outweigh its potential monetary loss? The answer is most likely yes, but only if the ticket price is low enough. Otherwise, the ticket is not a rational purchase. For this reason, the societal impact of lotteries should be carefully evaluated before they are expanded. This is an important and timely book. We need more such studies.

Categories: Gambling