The history of the lottery dates back to the ancient world. Documents of ancient societies show the practice of drawing lots to determine ownership of land. By the late fifteenth and sixteenth centuries, this practice spread across Europe and the United States. The first lottery in the United States was created by King James I of England in 1612 to raise funds for the colonial settlement of Jamestown, Virginia. Later, lottery funding was used to fund town-planning efforts, wars, colleges, and public-works projects.
The state lotteries have relied on the spirit of optimism and human psychology to increase the jackpots. Even skeptical players buy a few tickets when the jackpot is growing and occasionally put their money into an office pool. These “infrequent players” are what help to push jackpots to historic highs. The latest Mega Millions drawing could bring in an instant mega millionaire. But what about the other infrequent players? How do they get involved?
Per capita spending by African-Americans on lotteries
The University of Maryland Baltimore County’s study of fiscal year 2005 lottery sales in the state found that a disproportionate share of participants were black. The highest percentage of African-Americans, in fact, spent more than $10 a week on lottery tickets, compared with whites. Black respondents spent more than twice as much on lottery tickets as white respondents, which makes sense since they are disproportionately poor.
In fact, lottery spending among African-Americans was about 29 to 33 percent higher than that of the average white and Latino ZIP codes. The highest-priced lottery tickets were purchased by people living in ZIP codes that were 70 percent black. In contrast, white ZIP codes had an average of $173 per person, while Latino ZIPs spent only $82 per person. One public relations director said this is not the fault of black residents, but rather a result of the fact that these communities have historically been poor.
Regressivity of lottery participation among lower-income people
A recent study examined whether government-sponsored lotteries generate disproportionate revenues from low-income consumers. Although previous academic research identifies several levels of regressivity, some research concludes that lotteries are proportionate while others say that they are progressive. Moreover, prior studies suggest that regressivity levels vary across states and over time. To address this, the current study analyzed longitudinal sales data from six lottery states to identify the level of regressivity.
The results of a negative binomial regression showed that participation in lottery games is more regressive among low-income people than among middle-income people. The study also found that the lottery’s prevalence was higher among lower-income people than among the richest people in the state. Further, more lottery advertising was associated with lower-income participants. According to this study, lottery advertising reduced regressivity.