We Should Probably Ban The Lottery
Imagine that tomorrow, a policy was introduced in Congress: a new tax which would be targeted at low-income Americans, those making under $30,000 per year. It would charge them $400 per year, on average, but vary by education level - those with less education would be charged more. This would be obviously a bad policy, right? No one would publicly advocate for this, except for maybe Rick Scott. Even if the money is going to somewhere good, a tax that charges people with less income and education more money seems pretty clearly bad.
I think that this tax I’ve described is essentially the lottery. Low-income households spend considerably more on lottery tickets than high-income households. Total revenue by state lotteries in 2022 was about 100 billion dollars, implying that the average American spends about $300 on lotteries per year. That’s a significant amount of money, and much of it comes from people who can least afford it. True, the lottery has prizes while this tax wouldn’t, but your chance of actually winning the jackpot is about 1 in 292.2 million, so for nearly everyone they are the same thing. If we wouldn’t want this tax on low-income people, we shouldn’t have the lottery, either.
The obvious argument against this is that unlike taxes, lotteries are voluntary. You don’t have to buy lottery tickets if you don’t want to. And they provide a benefit to some people - specifically, people who get more than $2 of satisfaction out of buying a ticket and dreaming about what they would do with a billion dollars. Why should we get rid of something that provides value to people, even if it hurts some people? The same argument, that it hurts some people disproportionately, could apply to cigarettes, alcohol, or even something like candy.
In this case, though, the benefits don’t clearly outweigh the costs. The benefits are, like, “once every couple months, some people get to dream about winning a billion dollars,” and “the government gets a little more money.” The costs are “taking money from low-income people by taking advantage of their relative lack of understanding of probability”. Is that really something that should be advertised in every 7-11 in the country?
You could also argue that the money that the government gets from the lottery is good because it goes to fund things like education, which are good. I agree that education is good (crazy take, I know), and to use an example, the approximately $2 billion that California’s education system got from the lottery in 2022 was a good thing to spend the money on. (If they have to keep the lottery, California should give an additional $5 billion to education by keeping everything else the same and making lottery prizes 10 times harder to win.) But California’s overall budget is about $225 billion, and education gets about $80 billion of that, so it’s not like it’s a huge percentage of the education budget. The real problem with this is not that education is being funded, but that you shouldn’t even fund good things by taking money mostly from low-income people. It’s better than funding bad things, but ultimately the goal should be to fund no things.
Additionally, we should hold the government to a higher bar than we hold private citizens, or corporations for that matter. The whole reason to have a government is to improve the lives of those living under it, and so it hopefully shouldn’t be too controversial to say that the government should try to do things that benefit its citizens. You may have many opinions on US government policy, but it seems clear that at least the stated intent behind most policies is to benefit the people. It’s often said that lotteries are a tax on people who don’t understand statistics. I agree! That’s exactly what they are! Why do we have a tax on people who don’t understand statistics? If people want to waste their money on things, let them do it, but the government shouldn’t be incentivizing people to waste more money. Lotteries don’t clearly benefit the people, and so they are not good policy.
To be clear, this post isn’t anti-gambling in general. I am glad sports betting exists (though I’m not sure how I feel about the constant promotions for it), for example - despite the fact that most people lose money on it, it’s a fun way to get more excited about a game you might not have cared about otherwise. Casinos are fun, too, although I would be in favor of more stringent regulation making casino companies try and stop people from gambling away money they can’t afford to lose. Additionally, neither of these are state-run. (Many casinos are, of course, run by Native American tribes, but that’s a little different.)
So let’s say we ban state-run lotteries. Should we allow private lotteries? I think maybe, but only with lots of regulation and stuff you have to agree to before signing up for it, similar to what you have to do to trade options. (And if you randomly buy a stock option, you’re gonna be better off most of the time compared to if you buy a lottery ticket). It would be bad if we traded “low-income people being exploited by state-run lotteries” for “low-income people being exploited by private lotteries,” so I would support whatever regulations are needed to ensure that these lotteries are actually, in real life, funded by people who are just having fun and who can afford it. You could, of course, apply these regulations to the existing state-run lotteries, but I’d prefer to just ban the state-run ones to avoid any possibility of the government scamming its own citizens.
Will this actually happen? Probably not in the near future. It’s not like I’ve founded a movement to ban lotteries, and it doesn’t really seem like an issue that’s much in the public perception right now. I mostly just see this as an example of a small, underdiscussed issue that I would try to change if anyone ever elected me President. It’s not a huge, sweeping change to society and seems like it could possibly be done by executive order. Perhaps someone reading this has a connection to an anti-gambling advocacy group, the group convinces a representative to care about this issue, and a bill gets introduced that eventually, quietly manages to pass. It seems pretty unlikely. But I think the odds are a little better than 1 in 292.2 million.