The Lottery and Its Marketing Effects

The word lottery invokes images of brightly-colored balls rolling around a wheel, and its history dates back centuries. The casting of lots was used to distribute land in the Old Testament, and Roman emperors held lotteries to give away property and slaves. Lotteries gained popularity in Europe during the fourteenth century, when towns would hold them to raise money for town defenses. Eventually, they spread to England, where Queen Elizabeth I chartered the first state lottery in 1567.

The earliest state lotteries raised funds for a variety of public purposes, including building town fortifications, funding wars, and giving to the poor. Those early lotteries, however, also tapped into a widespread desire for unimaginable wealth. In his essay “Life’s a Lottery,” Daniel Cohen observes that the nineteen-seventies and nineteen-eighties saw a steady decline in financial security for most Americans, as wages stagnated, joblessness grew, pensions eroded, health care costs soared, and the national promise that education and hard work would lead to a comfortable retirement or a secure middle class largely evaporated.

Lotteries are a popular form of gambling and are a significant source of revenue for states, as well as for localities and nonprofit organizations. The popularity of lotteries is evidenced by the fact that more than half of American adults report playing them at least once a year. But even if the majority of players are not problem gamblers, lotteries are still seen as a risky investment by many. In addition to their regressive effect on low-income groups, the large amounts of money that must be paid in taxes after winning can undermine a winner’s economic stability and create debt problems.

Most state-run lotteries sell tickets through a network of convenience stores, drugstores, and other retail outlets. In order to maximize revenues, they use a variety of marketing strategies, aimed at resonating with target audiences. The messages that are coded into the advertisements for these games imply that winning the lottery will improve one’s quality of life and that playing is an enjoyable experience.

While these marketing efforts may have a positive impact on lottery sales, they also compel people to spend more money on tickets. According to a recent study, Americans spend over $80 billion a year on the lottery. That’s over a thousand dollars per household! This money could be better spent on savings or paying down credit card debt.

The promotion of lotteries, which is usually at odds with public policy goals such as the need to address social problems like poverty and problem gambling, raises questions about whether it’s appropriate for governments to promote these activities. The fact that most state lotteries are run as private businesses also contributes to this debate, since their primary concern is to maximize profits. Nevertheless, there are a number of ways that the lottery industry has evolved to counter critics’ concerns. These changes include the expansion of the game offerings to keno and video poker, greater emphasis on advertising, and more aggressive promotion.