The Lottery as Gift: Who Wins?

By Jonathan Wynn

I was trying to think about a good topic to write about for the holidays. We here at the Everyday Sociology Blog have covered shopping crowds and even a Durkheimian Christmas. Scanning for something commonplace, I was talking with a student who told me that her family always uses lottery tickets as Christmas stocking stuffers, and it got me thinking.

At first, it seems sort of charming: kids waking up Christmas morning for the chance to win money. I remembered, as a kid, scratching off a lottery ticket from an uncle, with a lucky coin. Certainly all those New York State lottery commercials I remember reinforced the whimsy: "Hey, you never know!" and "All you need is a dollar and a dream!" But, thinking about it more—and beyond the idea of the lottery as a form of gambling, and outside of The Hunger Games—the sociology kicked in quickly.

But the lottery seems harmless enough. A little bit of fun and whimsy, right? (Here's a website that calculates your actual chances for winning a lottery.) It's not just that your odds are, in some places, 1 in 259 million (by comparison, the odds of being struck by lightening: 1 in 1 million). Here's another way of thinking about it: the lottery is a voluntary tax.

Vermont's lottery motto is "Play a little." We, in fact, play a lot. Americans spent $70 billion on lottery tickets in 2014. That's roughly $300 per adult, and that's more than we spend on movies, books, sports, and music.

Ostensibly, the argument is that lottery prize money goes to everyday folks, and that the rest is for education funds. Oregon's lottery motto is "It does good things." Five states (Delaware, Oregon, Rhode Island, South Dakota and West Virginia) set aside more money for the state than for the prize-winners.

The statistical research website FiveThirtyEight analyzed data on state financial records from the U.S. Census (available here, and here) , and found that "About two-thirds of lottery money is set aside for prizes. Then a small fraction, 5 percent nationally, is allocated to administration — that covers things like salaries and advertising. What's left is money for the states to spend."

Numbers vary state by state. Residents in my state, Massachusetts, spend the most per adult ($671), and our state lottery also distributes the largest amount of money to prize-winners. (See 538's infographic on lottery money allocations by administrative, state, and prizes here.)

And who plays the lottery? The majority of folks who play the lottery are at or near the poverty line. Furthermore, those folks gamble a higher percentage of their income than average. A study, entitled "Gambling on the Lottery: Sociodemographic Correlates Across the Lifespan," found that the lowest fifth in regards to socio-economic status had the highest rate of lottery gambling (61%).

Cornell Economist David R. Just notes that when unemployment rises, lottery sales improve. When poverty increases, so do lottery sales. In a study, Just and his co-authors note that poor folks (making less than $30,000 a year) are 25% more likely to say that they play the lottery in the hopes of winning money, while more wealthy folks disproportionately justify playing the lottery for fun. (And no surprise: A study on the predatory tactics of state-run gambling in the 1980s found that lottery advertising was disproportionately directed to poorer neighborhoods.)

Why do we have lotteries at all? States rely on them. Columnist David Cay Johnson notes a significant shift in the burden from corporations to individuals, noting that the lottery itself brings in more state money than corporate income taxes in 11 states. It is a form of public financing, funded by a subset of the population through the promise and hope of fabulous wealth.

We should also question how state funds are distributed . The Boston Globe notes that Massachusetts lottery funds go to wealthier communities, noting that "189 municipalities pay more into the lottery's local aid fund than they get back as aid, including 58 where the median household income is below the state average." (Here's an online tool for Massachusetts residents to see how their area fares.)

But education, right? When lottery funds go to education, those funds are not necessarily distributed to the neediest communities either. In Georgia, lottery funds go to college scholarships for students with A or B grades, even as we know, parental income is a strong predictor of test scores.

As such, then, the lottery is a redistribution of wealth. It is a voluntary tax, disproportionately levied on the poor. In that way, the lottery isn't a particularly exceptional phenomenon in our society. The poor are, in fact, swindled regularly—whether it is because of predatory lending, or everyday costs of low-income banking—and especially with more conventional taxes.

Still, The Atlantic calls our lottery system "America's $70 billion shame." The Washington Post recommends that you "never, ever play the lottery."

And here's a possible, very unsexy answer: Prizes for saving money. A think tank called the Bipartisan Policy Center proposes setting up savings accounts that enter interest into a lottery. In Michigan, a system called "Save to Win" has been established where every $25 of savings gets one entry into the lottery. Only nine states have set up such programs so far.

May the odds ever be in your favor? I don't think so. "A dollar and a dream?" Keep dreaming. And keep the dollar.

Comments

[HP]

Lotteries, low quality or fast food, cigarettes, smartphones, multiple/big screen TV all indicate lower quality of life for those who participate.

[Aditi Malhotra]

Hi Jonathan Wynn,
It's your interesting title that took me here,and I want to say that, winning a lottery for the purpose of fulfill your dreams is not sufficient until unless you are a hell lucky guy.
I can tell you with my experience that I only have won only 4 times even i am playing lotteries since my young age.
But your statistics about lottery is pretty good and informative for me. I really enjoyed the stuff by the way.