The Dangers of Lottery Gambling

Lotteries offer a small potential for monetary gain, which activates the brain’s pleasure centers. However, the lure of winning can lead to unhealthy behavior: people may spend more than they can afford or neglect work and relationships.

Since New Hampshire introduced the first state lottery in 1964, states have increasingly adopted them as ways to increase revenue without enraging an anti-tax electorate. But are these state-run games serving the public interest?


The modern lottery came to be when states’ need for revenue and their increasingly tax-averse electorates collided. Cohen argues that state leaders looked at lotteries as “painless” sources of funds and a way to avoid raising taxes. Lottery proponents also sold it as a way to fund government services that voters would support, such as education and elder care.

The first public lotteries in the modern sense of the word arose in the fifteenth century in the Low Countries, where towns raised money to build town fortifications and help the poor. By the sixteenth century, they were spreading to England and Italy.

These early lotteries typically started small, with a few simple games. As revenues grew, the companies that ran them progressively added more games to keep interest levels high.


Lottery formats are used to select winners in a variety of ways. Usually, the prize is a fixed amount of cash or goods. But in other cases, the prize is a percentage of total receipts. This reduces the risk to organizers and encourages a larger number of ticket purchases.

The choice of formats also has implications for the prize level. Left to their own devices, players will not select combinations with equal probability – for example, the six-digit selection 123456 is far more popular than 222222. This skewing leads to more rollovers, which in turn increases sales and profits.

These new games have prompted concerns that they may exacerbate the alleged negative effects of lottery gambling, including targeting poorer individuals and providing problem gamblers with more addictive games. They also blur the line between traditional lottery gambling and casino-style electronic wagering.


In addition to cash prizes, lottery participants can win other valuable items such as units in a subsidized housing block or kindergarten placements. These prizes can have a profound effect on households’ financial and life satisfaction. For example, a study published in 2019 used data from the German Socio-Economic Panel (SOEP) to track lottery winners and compare their satisfaction levels before and after winning.

Lottery winners can choose to receive their prize in a lump sum or as an annuity payment. The latter option is usually a smaller amount, since it takes into account the time value of money. In addition, some states have income taxes, which must be withheld from the prize check. Keeping your winnings private can also help you avoid unwanted attention from scammers and long-lost relatives.


People who are addicted to lottery gambling experience compulsive behavior that can negatively impact their lives. They may spend hundreds of dollars on scratch-off tickets and ignore other expenses, causing them to run into debts or create tension in their relationships.

Lottery games activate the same pleasure centers in the brain as drugs, so they can be highly addictive. They also provide a sense of hope and fantasy, which can be seductive to people who are addicted to them.

Lottery addiction can be difficult to overcome, but there are ways to break free from it. Using an effective treatment program like Gateway Foundation can help you stop lottery gambling and get your life back on track. The main goal is to change a person’s perception of gambling and how it affects their life.


As with any windfall, lottery winnings come with tax implications. Lottery winners can choose to receive their prize in a lump sum or as annuity payments. Each option has different financial impacts, so it’s important to consult with a qualified tax attorney or CPA before making any decisions.

In the United States, winnings are taxed as ordinary taxable income. The IRS typically withholds 24% of the winnings off the top, and winners can expect to pay federal taxes at the highest marginal income tax bracket. In addition, most states impose taxes on lottery winnings, though withholding rates vary from zero to more than 12 percent in New York City. NerdWallet Taxes, powered by Column Tax, makes filing your state and federal taxes simple. Get started today.