The Dark Underbelly of Lottery


A lottery is a game where people pay a small amount of money for the chance to win a large sum of money. Many state and federal governments run lotteries to raise money for certain causes. This article will explore the concept of Lottery in a short, easy-to-understand way that could be used by kids & beginners as part of a Money & Personal Finance lesson plan or curriculum.

It turns out that a lot of people just plain like gambling. There is that inextricable human impulse to try to make your luck through random chance. Lottery commissions know this, which is why you see billboards everywhere promising millions of dollars in the jackpot.

However, there is a dark underbelly to the lottery. It’s not just about giving away prizes, but also dangling the promise of instant wealth in an age of inequality and limited social mobility.

When you buy a lottery ticket, your money is placed into a pool with all the other tickets sold. The cost of promoting and organizing the lottery must be taken out, as well as any other administrative costs, and a percentage of that goes to the state or sponsor. The remaining money, which is paid out in prizes, can be split between a few very large prizes or a lot of smaller ones.

In the United States, lottery winnings are taxed at the state level, so about 40 percent of every dollar gets sent to the state. That might sound like a lot, but it’s only a drop in the bucket of overall state government revenue and spending.