The Ugly Underbelly of Lottery Marketing

A lottery is any contest where the winners are chosen at random. It can be a state-run contest with big cash prizes, or it can be more mundane, such as the selection of units in a subsidized housing block or kindergarten placements at a public school. Lotteries work where there is high demand for something and a limited number of ways to supply it.

People play the lottery for various reasons, from the pure entertainment value of watching numbers drawn to the chance to win a large sum of money. The decision to purchase a ticket can be rational, if the expected utility of the monetary prize exceeds the cost of the ticket. But there’s a more ugly underbelly to lottery marketing that is rarely talked about: Lotteries are promoting gambling, and they’re targeting specific groups.

The first European lotteries appeared in the 1500s with towns attempting to raise money for munitions and relief for poor citizens. King Francis I of France imposed a nationwide lottery in 1539, but it failed. Lotteries remained popular in England and the United States, where they helped fund roads, libraries, churches, colleges, canals, and bridges.

Lotteries are run as businesses with a mission to maximize revenues. To achieve this, they must reach certain broad constituencies: convenience store operators (who are the main vendors of tickets); suppliers (heavy contributions from lottery supplies to state political campaigns are frequently reported); teachers, who are often earmarked for lottery revenues; and state legislators. The state also has a particular interest in promoting the lottery because it needs to raise revenue for its general operation, including pensions and health benefits for its employees.