Lotteries are games of chance in which a random number is drawn to determine winners, and can be run by government or private entities. They typically involve multiple people buying tickets for a small amount of money in order to have a chance to win a larger sum of money. The concept of a lottery is often used as an example to illustrate the concept of probability and statistics. This article explores the history of the lottery, its origin, and its impact on American society. It is intended to be used as a resource for students and can be incorporated into a social studies or money & personal finance course.
The word “lottery” comes from the Middle Dutch nool (“fate”) or lootje (“fate”). It was originally used to describe a game of chance, but by the fourteen-hundreds it had become associated with public funding, and in 1669 England introduced the first state lottery. It was designed to raise money for town fortifications and, later, charitable donations. It was also a popular way to celebrate the granting of a royal pardon.
In the nineteen-sixties, as America’s prosperity waned, it became more difficult for states to balance their budgets without raising taxes or cutting services, both of which were highly unpopular with voters. Lotteries were a budgetary miracle, Cohen writes, providing states with hundreds of millions in revenue seemingly out of nowhere, letting them keep their existing programs while avoiding the unpleasantness of tax hikes.
The popularity of the lottery increased in lockstep with a decline in financial security for working Americans. During the eighties and nineties, pensions and job security began to disappear, health-care costs rose, and income inequality widened. For many, the once-simple promise that a good education and hard work would make them richer than their parents had been, no longer held true.
To the poor, however, a lottery jackpot of a few million dollars was a dream come true. It might not have made a difference in their overall standard of living, but it did represent an opportunity to escape the drudgery of the everyday world and the grinding poverty of their family life. In this sense, it was a meritocratic fantasy of the “good old days.”
The poor also bought far more lottery tickets than the wealthy did. A report from the consumer financial company Bankrate found that, on average, lottery players making more than fifty thousand dollars per year spent one percent of their income on tickets; those earning less than thirty thousand dollars devoted thirteen percent of their income. Those numbers were only exacerbated by the fact that the odds of winning a prize increased as the jackpot size went up.