The lottery is a big part of American culture and state budgets, raising billions each year. It’s also a popular way to dream about becoming wealthy, a notion fueled by big jackpots that generate media coverage and attract people who wouldn’t otherwise gamble on the lottery. But is it really a good idea?
Lottery, in its broadest sense, refers to any system in which prizes are awarded by chance. Prizes can be cash or goods, and the prize fund may be a fixed amount of money, a percentage of total receipts, or a mix of both. Lotteries have a long history and are widespread throughout the world. The earliest public lotteries awarding money prizes are thought to have occurred in the Low Countries of Flanders and Burgundy in the 15th century, with towns attempting to raise funds for town fortifications or poor relief.
For most people, however, the primary purpose of playing a lottery is entertainment value. The monetary prize that is received depends on the number of tickets sold, and if multiple winners are declared, the prize is split evenly. In these cases, the expected utility of a monetary loss is outweighed by the entertainment value or other non-monetary benefits. Nevertheless, the ubiquity of lotteries in modern society has raised questions about whether they are a rational choice for many individuals. Khristopher J. Brooks is a reporter for CBS MoneyWatch covering business and consumer stories that range from economic inequality and housing issues to bankruptcies and the business of sports.