The Regressive Impact of the Lottery

Lotteries are a fixture in American life, with Americans spending upward of $100 billion on tickets each year. Despite the odds of winning, people still buy them, arguing that the money raised by state-run lottery games is needed for things like education and public safety. But critics say those funds aren’t always spent wisely. And they claim that the regressive impact of the lottery hurts low-income residents of the states where it’s played.

State-run lotteries are legal in 45 states, the District of Columbia, Puerto Rico, and the U.S. Virgin Islands, as well as in every Canadian province. Many of the states participate in consortiums that offer games with larger geographic footprints and bigger jackpots. But there’s no national lottery, and each one operates independently.

The commissions of these lotteries have every incentive to tell voters and the public that they are doing a great service by raising money for the state. But that money is actually a drop in the bucket when compared to actual state budgets, and most of it is not collected efficiently.

The money is also regressive, with the top and bottom quintiles of income spending a far greater share of their discretionary dollars on lottery tickets than middle-class and upper-class households do. In effect, those who play the lottery are paying a regressive tax that goes to support a system that is not only profitable for its promoters and governments but has a long history of abuses, including bribery and corruption in both public and private lotteries.