Raising Money Through the Lottery

The lottery is an old and popular way to raise money for public goods and services. The modern version involves a random draw of numbers and a prize for those who match the winning combinations. While critics are quick to point out that the lottery is a form of gambling, and that people who play it risk losing their money, supporters say that it’s a useful tool for raising funds in a world where other options—like corporate philanthropy or tax deductions—are limited or unavailable.

In some lotteries, the total value of the prizes (excluding expenses for promotions and taxes) is predetermined and may be shared among several winners or split between several smaller prizes. In other lotteries, the number and value of the prizes are determined by the amount of money in the prize pool. In either case, the initial odds are a bit misleading. People who buy tickets for the lottery believe that the odds of winning are much, much higher than the actual probability of winning.

People who win the lottery generally choose their own numbers and are likely to pick personal numbers such as birthdays, or other lucky numbers like home addresses or social security numbers. A woman who won the Mega Millions jackpot in 2016 used seven as her lucky number. Clotfelter says that those types of numbers tend to have more patterns and are less random.

Scratch-off games are the bread and butter of lottery commissions, making up between 60 and 65 percent of total lotto sales. But they’re also regressive, largely because lower-income players play them in greater numbers than richer people do.