Lottery Taxes and Social Inequality


Lottery is a popular form of gambling that can produce spectacular wins, but it also has an inextricable link to social inequality and a dangerous conceit that we are all entitled to instant riches. It is no wonder that governments are embracing it as a revenue source, even though the lottery is inherently regressive and has a strong addictive potential. The conceit is that people will buy tickets, and the government can use this money to pay for services such as schools and roads that would otherwise require taxes. Lottery critics have compared this to sin taxes on vices such as alcohol and tobacco, but the difference is that people don’t have the same option of refusing to participate in those vices.

The concept of distributing property or goods by chance dates to ancient times. In the Old Testament, Moses was instructed to conduct a census of Israel and distribute land by lot; the Roman emperors used lottery-like drawing to give away slaves and property during Saturnalian feasts. The first modern public lotteries arose in 15th-century Burgundy and Flanders, with towns raising money to build fortifications or assist the poor. Francis I of France allowed the establishment of public lotteries in several cities. In colonial America, lotteries were a major source of public funding and helped to finance roads, canals, libraries, churches, colleges, and private enterprises. The Continental Congress voted to establish a lottery to raise money for the American Revolution, but this was unsuccessful. Privately organized lotteries were common in England and the United States, as well.

In the United States, state-run lotteries grew in popularity during the late nineteen-seventies and early nineteen-eighties, as states searched for ways to fill budget gaps that did not enrage anti-tax voters. They argued that the lottery was an effective way to generate revenues because most people were going to gamble anyway, so the government might as well keep the profits. This argument missed the point that gambling is an addictive activity, and the odds of winning the lottery are very low – even the most dedicated player can only win about a thousandth of the available prizes.

Despite the low odds of winning, the popularity of the lottery continues to grow. While some may argue that this is due to the fact that more people are participating, it can also be attributed to a change in the social context of lottery play. Lottery players are now older, and they tend to be more affluent than in the past. In addition, men play the lottery more than women, and blacks and Hispanics play more than whites. The overall increase in lottery participation has not been matched by an equivalent increase in non-lottery gambling. This suggests that a growing number of Americans is losing faith in the promise that hard work and prudent financial decisions will yield prosperity. Instead, many are looking for shortcuts to the American Dream – a shortcut that the lottery represents.