Americans spend tens of billions of dollars on government-run lotteries each year. Americans spent $80.3 billion on lotteries in fiscal year 2017, up from $57.4 billion in 2006, according to the North American Association of State and Provincial Lotteries. Of the 43 U.S. states that have government-operated lotteries, New York sold the most in lottery tickets, producing $9.7 billion in revenue. (An enormous figure, that is still less than 2 percent of the state’s budget.)
But as income inequality widens, low-earning households spend a disproportionate amount of money on lottery tickets, according to a new study.
The lowest-income households in the U.S. on average spend $412 annually on lottery tickets, which is nearly four times the $105 a year spent by the highest-earning households, according to a study released on Wednesday by Bankrate.com. And almost 3 in 10 Americans in the lowest income bracket play the lottery once a week, compared with nearly 2 in 10 who earn more than that.
“Lotteries have become an alternative mechanism of social mobility—a way of achieving financial success in an economy that’s increasingly bereft of those opportunities,” said Jonathan Cohen, a Ph.D. candidate at the University of Virginia who’s completing his dissertation on American lotteries. “There’s an understandable belief that the economy is rigged and your best chance of making it out and getting rich is through the lottery, not through your job or savings.”
Americans making less than $30,000 a year are most likely to buy multiple lottery tickets each week, the study shows. These low earners spend 2.5 percent of their take-home pay on lottery tickets, or about $8 a week. And though the highest-earning group Bankrate.com measured makes more than eight times the lowest group’s average income, they spend three times less on lottery tickets.
Cohen attributes the increase in sales to widening income inequality and other sociopolitical factors. “While lottery profits account for a very small percentage of each state’s overall revenue, it’s costly to the state’s poor, the less educated, and communities of color,” Cohen said.
“I don’t think it’s a coincidence that state lotteries started emerging in the 1970s and 1980swhen rates of social mobility in the traditional economy stagnated and then declined,” Cohen said. “Lotteries are a runaway train, seeing increased spending over time. But the communities playing the lottery get a lot less out than they put in.”