Your Right To Play Lotteries
Is Under Attack

How a few want to stop the many from playing all types of lotteries, including government-run games. And why their reasoning is wrong.

Can we please stop spreading the lottery-is-an-unfair-tax-on-the-poor myth?

The Lottery.

It’s been called an investment for fools, played predominantly by poor people with desperate dreams who lack the financial sophistication to improve their standard of living through more sound investments.

A recent article in The Atlantic calls it “America’s $70 Billion Shame.”

Use Google to search the topic and you’ll find hundreds of articles and research papers repeating the same basic arguments:

U.S. state-run lotteries set aside about 40% of their ticket sales to fund government services like schools.

The poorest third of U.S. households buy half of all lottery tickets.

The poor, so goes the argument, tend to be less educated and less able to evaluate accurately lottery probabilities. They play not for fun and entertainment, but for an ill-conceived belief that participation will improve their financial well being.

Desperate to improve their dire economic situation, those who can least afford it become addicted to the hope of suddenly becoming rich and spend money foolishly on a game they can’t possibly win.

This involuntary spending should be more accurately labeled an unfair and a regressive tax on the poor.

There’s only one problem with this argument.

It’s wrong.

And it has the distinction of being simultaneously condescending and hypocritical.

The conceit is introduced in the I-know-how-you-should-spend-your-money lecture by upper-middle-class writers from their Herman Miller Aeron chairs, holding jobs that offer security, healthcare and 401(k)s.

All this tut-tutting is done while ignoring their own $200 spend on a bottle of wine, which, studies confirm, they can’t distinguish from a $20 bottle. And is it really necessary to mention the economic frivolity of McMansions, Mont Blanc, Mercedes, and Marc Jacobs?

One man’s gratuitous expenditure is another man’s night at the opera.

Of course, you can also extend the Temperance Union crowd’s argument to Las Vegas, March Madness, and Saturday-night bingo.

Is there really a difference between scratch-off games and slot machines?

And for that matter, which did more harm to society: playing the lottery or participating in the collateralized debt obligations game in 2007-2008?

The Argument’s Glaring Flaw

Digging into the research used by lottery opponents uncovers a range of methodological flaws and contradictions, not uncommon in the soft sciences.

However, one error stands out.

Their argument assumes that if the lottery did not exist, the money would be directed towards activity with higher marginal return, like investing in an IRA, eating healthier, or going to the doctor. This bumps up against other economic research which shows given extra money, most people would spend the marginal earnings on entertainment not healthcare, education, or savings. So if the lottery were banished, it isn’t like everyone would automatically become uber savers.

Why We Play the Lottery

The simple fact is more than 50% of the U.S. population play the lottery in a typical year, spending on average $106 per person annually.

We play for a host of reasons.

First among them, we want to become rich. Don’t most people?

Human behavior expert Dr. Wendy Walsh explains, “People love to have a rescue fantasy. We have the Cinderella complex – there’s a fairy godmother who’s going to come in and save us.”

Dr. Stephen Goldbart, author of Affluence Intelligence, calls it “a ticket of hope and magical healing.” For many, the American dream is slipping away and a sense of economic disempowerment is becoming permanent. The lottery lets you believe in magic. “That some big thing will happen that will make everything right.”

It’s not the players don’t understand the long odds. We’ve all done the math and determined that the $2 price for a ticket is a relatively small one to pay for the enjoyment of thinking through how we might organize our lives differently if we had all those millions.

Some folks escape their everyday lives in a movie theater seat. Others do so while scratching off the UV ink coating on a Million Money Mania ticket.

Is one form of escape superior to another?

George Loewenstein, professor of economics and psychology at Carnegie Mellon University, rejects the idea that most lottery players, poor or otherwise, are harming themselves: “It’s ridiculous to say that 51% of the population is just irrational or self-destructive. . . . [The lottery] serves a psychological function. . . . Our pleasure of living is not only based on our current situation, but . . . what we can imagine our situation could become.”

Then there’s the social aspect of playing the lottery.

When the Powerball jackpot nears half a billion dollars, it becomes topic number one around water coolers and on the 24/7 news shows, as workers invite their colleagues to chip in $2 for a ticket and a shared daydream.

“Jumping on the bandwagon is an age-old motivator of psychological behavior,” explains Goldbart and his colleague, Joan DiFuria. “We want to be with the in-crowd, to be ‘part of the movement,’ not ‘feel left out.’ ”

Finally, gambling, risk-taking, betting on long odds in hopes of outsized returns is part of human nature and has played a critical role in our advancement as a species since homo sapiens squared off against the physically superior Neanderthals and won. It’s why Marco Polo headed East. Christopher Columbus headed West. And Henry Ford headed to his garage.

“Taking risks is part of our human legacy. We are all motivated to survive and reproduce. To accomplish both involves choices that might lead to negative outcomes. Essentially, that is risk taking,” says Daniel Kruger, an evolutionary psychologist at the University of Michigan.

So, yes, we all take risks. Many of us gamble and dream of winning despite the odds. And even more of us spend money on entertainment others consider frivolous, even foolish. But it’s OK. It’s how we humans get along and get ahead.