The Truth About Lottery Advertising

Lotteries are games of chance involving the drawing of numbers to determine winners. In the United States, state lotteries sell tickets and award prizes ranging from a few dollars to tens or hundreds of millions of dollars. These games are a popular source of recreation for millions of Americans and, according to some estimates, generate billions in revenue for state governments each year. Many critics, however, argue that lotteries are regressive in nature and impose costs on those least able to afford them. In addition, they promote the false notion that money can solve all problems and offer the prospect of instant riches to those with little else in life to spend it on.

Studies suggest that a large proportion of lottery players are people in the 21st through 60th percentile of the income distribution, with disproportionately high representation among those living below the poverty line. They play because they believe that the lottery is a way to improve their standard of living and to achieve their version of the American Dream. They also have little else to do with their discretionary money, and are likely to spend more on lottery tickets than those in the top income bracket.

The most significant change in the way state lotteries operate since the 1970s has been the introduction of instant games and scratch-off tickets, which provide a much lower prize level but higher odds of winning than regular lottery tickets. These innovations have radically changed the nature of lotteries and created new incentives for playing. They have also contributed to a sharp decline in the number of traditional lottery tickets sold. Revenues typically expand dramatically following the introduction of a new game, but eventually plateau and sometimes even decline, as lottery players become bored with the game and move on to other games.

Because lotteries are businesses focused on maximizing revenues, their advertising must be geared toward persuading target audiences to spend money on tickets. Lottery advertising is widely criticized for presenting misleading information about the odds of winning, inflating the value of jackpots (in most countries, winners can choose to receive their prize either as an annuity paid out over 20 years or as a lump sum), and generally misreporting the amount of taxes that will be withheld from a winning ticket.

While some people use the lottery to save for major expenses such as a home or car, most of us just buy a few tickets because we enjoy fantasizing about winning a fortune for a couple of bucks. While for some, this is harmless fun, for others – often those with the least to spend – lotteries can become a serious budget drain and contribute to inequality and social instability. That is why some people argue that the lottery is nothing more than a disguised tax on those least able to afford it. And if that’s the case, then why are so many Americans playing?