Why Are Lottery Revenues Going Down?


A lottery is a form of gambling in which numbers are drawn at random for prizes. Some governments outlaw it, while others endorse it and organize state or national lotteries. Lotteries can also be used to raise money for a variety of other purposes, including public works projects and charity.

In the immediate post-World War II period, lotteries were popular as a way for states to raise money without onerous taxes on middle and working class citizens. But as time went on, it became clear that lottery money was a stopgap—that it would provide only a modest amount of money, and that it would eventually run out. States would need to expand their social safety nets, or they would have to increase taxes.

But a new study suggests that the real reason that lottery revenues keep going down is that lottery players are losing interest. That may be hard to imagine given the popularity of the game, but it is true. The number of people who buy tickets varies, but the average player isn’t playing very much. People are buying one ticket when the jackpot is big, and then that’s usually it. In the past, people bought multiple tickets on a regular basis. Now they’re buying fewer and fewer.

The decline in participation is due to a number of factors, but a big one is that most Americans are now better off than they were 50 years ago. They have more income, less debt, and a lower level of inequality than their parents did. The share of the population that is “poor” or in the middle class has shrunk, while the share that is rich has increased. This change in the distribution of wealth means that fewer and fewer people are spending their disposable incomes on lottery tickets.

As a result, the average prize size has stayed relatively constant while the odds of winning have gone down. The old saying that the more you risk, the more you can win is fading away. People don’t want to put the same money into a lottery with worse odds than before.

What’s more, lottery players are a particularly fickle group. They are very responsive to economic fluctuations: Sales increase as incomes fall and unemployment rises. In addition, they are highly responsive to advertising: Lottery ads appear most heavily in neighborhoods that are disproportionately poor, black, or Latino.

In fact, the lottery is not so much about chance as it is about addiction. Like the marketing strategies of tobacco companies or video-game makers, lottery commissions are not above availing themselves of the psychology of addiction. They do everything they can to make sure that lottery players come back for more: the look of the tickets, the math behind them, and the ad campaigns are all designed to encourage addictive behavior. And in some cases, that strategy has worked. The stories of Abraham Shakespeare, who killed himself after winning $31 million; Jeffrey Dampier, who shot himself after winning $20 million; and Urooj Khan, who poisoned herself with cyanide after winning a comparatively small $1 million, are all reminders that even a lottery win can be dangerous.