How Lottery Companies Can Minimize the Damage They Do to Society


People play the lottery for a number of reasons. They like the idea of instant riches. They’re also irrational gamblers who have all sorts of quote-unquote systems that aren’t based in statistics (like picking their children’s birthdays or a sequential numbers such as 1-2-3-4). Regardless, they know that the odds of winning are long.

Lottery is a big business and the jackpots have to be large enough to lure in players. But a lot of the revenue that goes to the prize pool isn’t generated by ticket sales. Instead, it’s from a small percentage of players who win a large portion of the total prize money. These players are disproportionately lower-income, less educated, and nonwhite. And, to make things worse, they tend to lose most of their winnings shortly after the big jackpot.

There are some ways that lottery companies can mitigate the damage that their games do to society. For one, they could cap the jackpots. This would stop irrational gambling behavior but it wouldn’t necessarily reduce overall ticket sales. It’s more likely that a cap would reduce the average jackpot size, which is a good thing in this case because it gives states some control over how much of the prize money they’re giving away.

Another way that lottery companies can limit the damage is to promote the annuity option, which pays out the entire prize in 30 years. Almost 90% of winners choose this option. It’s not as lucrative as a lump sum but it’s better than losing most of the money soon after winning.