Is the Lottery a Hidden Tax?
A lottery is a gambling game in which people buy tickets with numbered numbers on them. Those whose numbers are drawn win a prize. People also use this word to describe processes in which a significant proportion of what happens depends on chance. For example, the way judges are assigned to cases is a bit of a lottery, because it depends on luck and chance which cases they will be given to deal with.
Lotteries are popular among Americans, with some states making a big part of their budgets from ticket sales. But a ticket costs money to purchase, and there is often a high cost of running the lottery system. It takes staff to design scratch-off games, record live drawing events, and run the websites and call centers for those who win. The overhead for these services eats into the winnings. The fact is that lottery players are paying a hidden tax when they buy a ticket.
It is a big lie that money is the answer to life’s problems, and many gamblers, including lottery players, are lured into this false hope by promises of instant riches. God wants us to earn our wealth honestly, through hard work, rather than by cheating or stealing (Proverbs 22:7). He does not want us to covet our neighbors’ houses or their cars or their servants, wives, or oxen (Exodus 20:17; 1 Timothy 6:10).
Those who have little money to spare, often the poorest of the poor, are disproportionately represented among lottery players. Many critics argue that lottery games are a hidden tax on those who can least afford it. Retailers must pay commissions on each ticket sold, and the government also taxes the winnings. And in some countries—the U.S., for instance—the prize money is paid out in a lump sum instead of in an annuity. That erodes the winner’s buying power, especially when state income taxes are added.
States advertise the lottery as a way to help children, and it is true that the funds raised by lottery games do benefit local communities. But those promotional messages fail to put that funding in context of overall state revenue, and they mislead people about the true costs involved in playing the lottery. And it is important to understand those costs before purchasing a ticket. It is also wise to play with a predetermined budget, and to educate yourself on the slim odds of winning. That may help some people to make better decisions about their gambling behavior. And it may help them to remember that if they do win, their prize will likely be much smaller than the amount advertised on billboards. The truth is that there is no such thing as a free lunch. Unless you are a lottery winner. Even then, there are no guarantees. This article was originally published in the April 2021 edition of Newsweek. Copyright