In the United States, people spend upward of $100 billion on lottery tickets every year. This makes it the most popular form of gambling in the country. But how much of a role this money plays in broader state budgets, and whether it’s worth the cost to regular players, is still up for debate.
Lottery revenues usually explode initially, then level off and even decline over time – a phenomenon that has prompted the introduction of new games to maintain or grow interest in the game. Until recently, the majority of state lotteries operated as traditional raffles, in which participants paid for a chance to win a prize by matching a series of numbers drawn at a future date. But innovations in the 1970s radically changed the industry. Among other things, instant games, often in the form of scratch-off tickets, reduced the time between purchase and payout and offered higher prize amounts for lower ticket prices.
State officials promote the lottery by emphasizing its value as a source of painless revenue, with proceeds dedicated to specific public goods, such as education. But these arguments have been largely unsuccessful. In fact, studies show that the objective fiscal health of a state government doesn’t appear to have much bearing on whether or when a lottery is adopted.
Rather, a big part of the appeal lies in the inherent aspirational nature of the game. Lottery campaigns expertly play on a psychological phenomenon known as the fear of missing out, or FOMO. By depicting stories of past winners and their newfound wealth, the campaigns evoke a desire to experience this same happiness for oneself.