What’s Going On Behind the Lottery Billboards?


Whether or not you play the lottery, you’ve likely seen the billboards that promise huge jackpots and a life of luxury. It’s a tempting promise, and the inexorable human impulse to gamble is why lotteries work. But there’s a lot more going on behind the scenes than just that. In fact, there’s a lot of unethical behavior going on that makes lotteries worse than they should be.

Lotteries generate a lot of revenue for states, but the percentage they give out in prizes is smaller than it would be with a simple tax. This is because state governments need to keep the lottery business going, and to do that they need people to buy tickets. Consumers aren’t necessarily clear about the implicit tax rate on their ticket purchases, however. They’re told that buying a ticket is a good thing because it helps the state, even though the money goes to a specific prize rather than just general state revenues.

Lotteries have a long history, dating back to King Francis I of France in the 16th century. But they were forbidden for two centuries before being reinstituted at the end of the 17th century as both public lottery games for the city of Paris (called Loterie de l’Hotel de Ville) and private ones for religious orders. They played a significant role in raising funds for a range of private and public ventures in colonial America, including roads, canals, churches, colleges, and universities.