Many Americans spend upward of $100 billion on lottery tickets every year. It’s the most popular form of gambling in America and, as a state revenue source, it has a rosy reputation. However, there are plenty of cases where lottery winners end up worse off than before they won. The big jackpots often make people more indebted, and they can also trigger a series of poor financial decisions that erode their quality of life.
Lotteries have long been an important way to raise money for a variety of purposes, from public works projects to wars. They are easy to organize and highly popular with the general public. At the outset of the Revolutionary War, Alexander Hamilton wrote that “Everybody… will be willing to hazard a trifling sum for the chance of considerable gain.”
But there’s something else going on with lotteries: they promise instant riches in an age of inequality and limited social mobility. Billboards for Mega Millions or Powerball dangle these promises and they do draw people in.
In fact, most of the people who play lotteries are in the 21st through 60th percentile of income distribution. These are folks with a few dollars of discretionary spending but not a lot of opportunity for the American dream or entrepreneurship.
They’re playing for the chance to get out of their rut and maybe start over. But they also know the odds are long and they don’t want to go into it blind. So, they look for tips. And there are lots of them out there, ranging from quotes-unquote systems that aren’t based on statistical reasoning to strategies for buying Quick Picks.