The Odds of Winning Are Low and the Lottery Is Not a Smart Investment


The lottery is big business and a source of billions in revenue each year. But the odds of winning are low and it’s not a smart investment for most people.

In the early twentieth century, states’ growing awareness of all the money to be made in gambling collided with a crisis in state funding. Thanks to population growth and a social safety net that had become increasingly costly, balancing state budgets became difficult without raising taxes or cutting services—both of which were unpopular with voters.

Against this backdrop, in 1964, New Hampshire became the first state to legalize and run a lottery. Thirteen more followed in quick succession, all but two of them in the Northeast and Rust Belt. The lotteries, Cohen writes, arose in part from a peculiarly American brand of populism, in which people were encouraged to gamble as a way of “redistributing wealth” without imposing direct taxation on anyone. This reasoning, which was not without its pitfalls—it was, for example, a major factor in entangling the lottery with the slave trade—dismissed long-standing ethical objections and gave cover to people who would otherwise oppose gambling.

When the first state-sponsored lotteries appeared, they were usually little more than traditional raffles, with participants buying tickets for a drawing that would take place at some date in the future. But innovations in the 1970s ushered in a new era of instant games. Unlike the prepaid scratch-off tickets of the past, these allowed the public to play whenever they wanted and to purchase tickets for small prizes that were awarded immediately. Revenues initially surged, but then leveled off and began to decline—a phenomenon that has driven the introduction of ever-new games to maintain or increase them.

Most people who play the lottery do so for fun, but some believe that it’s their last, best or only chance to get ahead. They’re often clear-eyed about the odds and have quote-unquote systems, such as selecting certain numbers or purchasing tickets only at lucky stores or times of day. They also understand that, no matter how much they play, they’ll probably never win.

Whether or not they’re right, most people who play the lottery can’t help feeling that someone, somehow, has to get rich, so we shouldn’t be so critical of their hobby. But the truth is that, unless you’re among the very few people who regularly win the jackpot, there’s really no point in trying to rationalize it. You’re going to lose, so why bother? This article originally appeared on NerdWallet and is reproduced here with permission. To keep up with the latest on personal finance, sign up for NerdWallet’s newsletter.