The Hidden Tax of the Lottery

The lottery is one of the most popular forms of gambling. Players pay a small sum to enter, then wait to see whether their numbers match those randomly drawn by machines. The prize money can range from a modest amount to a huge lump sum, or even an entire estate. The idea behind it is that anyone, regardless of income level, can win. Unlike most games, the lottery doesn’t discriminate. It doesn’t matter if you’re rich, poor, white, black, or Mexican. Your current status makes 0% difference to the outcome of the lottery.

The heyday of state lotteries was in the immediate post-World War II period. State governments needed new revenue sources to expand their social safety nets. They saw the lottery as a great solution: it would raise big bucks, and people were willing to gamble a trifling sum for the chance of substantial gain.

It worked, but it didn’t last. The lottery became a hidden tax. Today, it’s the third largest source of state government revenue, accounting for about 15 percent of the budget. Most of it comes from scratch-off games, which are more regressive than other lottery games. People who play those games are disproportionately lower-income and less educated.

The lottery is also a major source of education funds. The State Controller’s office determines how much is allocated to each county. You can see how your county’s share is distributed by clicking or searching for it on the map, or by downloading the quarterly PDF reports linked below.