A Hidden Tax Hits Lower-Income People Hardest When Playing the Lottery

Across the country, people spend more than $100 billion on lottery tickets every year, making it the most popular form of gambling. The jackpots can be staggering, but winning is a long shot. And those who do win, as a study of one family reveals, may find their quality of life plummets after they hit it big.

In the United States, state governments have the exclusive right to operate lotteries and use their profits to fund public programs. The result is a unique type of government monopoly that allows for high jackpots and low odds, but also carries a hidden cost that hurts many people.

While some believe that lotteries are an enticing way to increase revenue without raising taxes, this is not necessarily true. In fact, in a recent article, researchers found that lottery revenues can actually be a hidden tax that hits lower-income people hardest.

The reason is that lower-income people tend to play scratch-off games, which make up a majority of total sales and are among the most regressive forms of lottery play. They buy multiple tickets in hopes of hitting the jackpot, but are much less likely to do so than those who can afford to purchase more expensive tickets.

To entice more players, some lotteries offer prizes like cars and motorcycles or even sports teams or celebrities. These merchandising deals help boost ticket sales, but they can also deter low-income people from playing the lottery altogether.