What is a Lottery?

A lottery is a form of gambling that involves drawing numbers at random for a prize. Some governments outlaw it, while others endorse it to the extent of organizing a national or state-level lottery. The purpose of this video is to explain the concept of a lottery in a way that kids and beginners can understand, it would be great for use in money & personal finance classes or in K-12 curriculum.

Throughout human history, people have used lotteries as a way to distribute property and other assets, including slaves. The ancient Romans, for instance, had a popular dinner entertainment called the apophoreta, in which participants selected pieces of wood bearing symbols to win prizes. Lotteries became more prevalent in the fourteen-hundreds, when towns and cities began using them to raise money for building defenses or aiding the poor. The practice caught on, and by the end of the Revolutionary War, the Continental Congress had to rely on lotteries to raise money for the colonial army. Lottery profits were considered a painless form of taxation, and Alexander Hamilton understood the appeal, arguing that “Everybody… will be willing to hazard a trifling sum for the chance of considerable gain.”

Cohen argues that America’s lottery addiction dates back to the nineteen-sixties, when growing awareness of all the money to be made in the gambling industry collided with a crisis in state funding. As the population grew and inflation rose, many states found it impossible to balance their budgets without raising taxes or cutting services, and both options were extremely unpopular with voters.

As a result, states turned to the lottery to raise funds and create new jobs, and the lottery quickly became a popular pastime. Today, you can buy a lottery ticket in the checkout line at your supermarket or pick up a Powerball ticket while buying a Snickers bar at the Dollar General. It’s no surprise that the lottery is a powerful force, with jackpots often soaring into the hundreds of millions of dollars.

But there is a darker underbelly to this alluring addiction. The fact is that the majority of people who play the lottery come from the 21st through 60th percentiles of income, people with a few dollars in their pocket for discretionary spending and no other ways up—no opportunities for entrepreneurship, no 401(k)s, no real hope of the American dream. And these folks are spending $50, $100 a week on tickets, which is a pretty hefty chunk of their meager incomes.