Inequality and Lotteries

By JOEL D. JOSEPH

Lotteries have been with us for thousands of years. The first recorded documents of a lottery are keno slips from the Chinese Han dynasty between 205 and 187 BC. During the reign of Augustus Caesar (27 BC to AD 14) a lottery was held to pay for municipal repairs in Rome. Now 45 states participate in lotteries and have joined together with Powerball and Mega Millions to offer massive prizes.

Basically, lotteries take in a few dollars from millions of poor and middle-class workers and pay out multiple millions of dollars. Sometimes they pay out a billion dollars, all going to one person. Recently a Californian won a $1.765 billion Powerball prize.

Wouldn’t society be better off if instead of one person winning $1.765 billion, 1,000 people each won $1.765 million? We would have a lot more happy people.

Most people who buy lottery tickets are seeking to get out of debt or to stop living paycheck to paycheck. According to a Lending Club report, 60% of Americans are living paycheck to paycheck. Buying a lottery ticket gives these desperate souls a chance to escape their debts, their credit card bills and student loans.

Lotteries are a symptom of a society that is not working well. The first time that I saw people buying lottery tickets was in Athens, Greece in 1969. Greece was then a poor country and many saw the lottery as a way to escape poverty.

Now lotteries are everywhere. This demonstrates a widespread feeling that people are in desperate economic straights. According to CNN, we now have student loan debt totalling $1.5 trillion, ahead of total credit card debt of $1 trillion.

In 1895, the United States banned lotteries. The Mafia stepped into the void and offered illegal numbers games in major cities across the country. In the 1960s and 1970s states began to offer state lotteries. Now states are using these lotteries to raise revenue for schools and other programs. In 2021, states raked in over $100 billion by selling lottery tickets. These states paid out about two-thirds of that amount to winners and, according to Statista, pocketed more than $30 billion in profits. That $30 billion certainly is needed by our public school system. It is far superior to giving the profits from the numbers racket to the mob.

Inequality in America has grown dramatically over the past 50 years. The Michigan Journal of Economics found, “Since the 1970s, economic inequality in the U.S. has skyrocketed, leaving many Americans living paycheck to paycheck while the nation’s top earners hoard all the gains from economic growth.”

Picking one winner of mega prizes, instead of 1,000 winners of smaller prizes, only increases income inequality. Each lottery winner spends money on vacations, cars, clothing, paying off debts and enjoying him or herself. This spending creates jobs. A lottery winner of $1 billion will probably save most of his or her winnings. This will not create as many jobs as creating 1,000 millionaire winners.

Let’s democratize our lotteries and spread the wealth. Making a few citizens billionaires does not help society as much as making 1,000 citizens millionaires.

Joel D. Joseph is a lawyer, an economist and author of “Inequality in American: 10 Causes and 10 Cures.” Email joeldjoseph@gmail.com.

From The Progressive Populist, November 15, 2023

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