The Risks of Winning a Lottery


A lottery is the procedure for distributing something (usually money or prizes) among many people by chance. The most common type of lottery involves paying for a ticket, selecting a group of numbers or symbols, and then hoping to match them to those drawn by a machine. A similar system is used to select recipients of public services, such as housing units or kindergarten placements. Some governments outlaw the lottery, while others endorse it and regulate it.

Lotteries have a long history, going back to Moses’ command to count the Israelites, and the ancient Romans’ distribution of slaves. In colonial America, they played a critical role in financing roads, libraries and other projects, often in partnership with private investors. During the nineteenth century, they were popular in many states, especially those without sales or income taxes. But by the nineteen-sixties, states were facing growing financial crises, due to a swelling population, rising inflation and the cost of war. Many politicians could not raise taxes and risk outrage from their constituents, and so they turned to the lottery as a way of creating revenue seemingly out of thin air.

To entice people to buy tickets, state commissions employ every trick in the book, from targeted advertising to the look of the tickets themselves, and even the math behind them. This isn’t inherently any different than the tactics of tobacco companies or video-game makers, but it’s unusual for a government to use them.

Once the prize money is paid out and operating and advertising costs are covered, states keep most of the money. In 2010 alone, New York took in more than $25 billion, Florida and Massachusetts over $8.5 billion, and Rhode Island and West Virginia over $6 billion. This is serious money.

But for most people who win the lottery, that money isn’t a windfall. It’s a huge burden that comes with its own set of risks, both to their mental health and their financial security. Experts recommend that winners stay quiet and avoid telling anyone about their new fortune, even their closest friends. They also need to document their wins, keep it in a safe place and surround themselves with a crack team of lawyers and financial advisers.

Richard Lustig, who won the New York State lottery in 2021, says his life was “relatively boring” before he won. But he now knows it’s a whole lot more exciting with a few extra zeroes in his bank account. He credits the key to his success to personal finance 101: pay off your debts, save for retirement and college, diversify your investments and maintain a healthy emergency fund. He adds, however, that a big part of winning is being prepared for the changes in your life that will come with it.