In America, state lotteries are the engine of a multibillion-dollar wealth transfer. This article explores the ways in which lottery marketing disproportionately targets lower income communities and people of color. The Howard Center’s investigative reporting team visited lottery retailers across the country and used cellphone data to reveal how lottery sales are concentrated in low-income neighborhoods.
The first legal lotteries, launched in the nineteen-sixties, were sold with the promise that they would fill state coffers and prevent tax increases or service cuts. Yet the reality was far different: in its first year, a single New Jersey lottery brought in just thirty-three million dollars. That’s less than two per cent of the total state budget.
Proponents quickly found that the only way to win the public’s support was to emphasize how lottery profits would benefit a specific public good, such as education. This argument proved persuasive, even in states with strong fiscal health, and has been one of the most persistent pillars of the lottery’s appeal.
In addition to funding school programs, many states also use lottery money for college scholarships. However, these scholarships can be awarded in ways that exclude some low-income students. For example, in 2020, a Howard Center analysis found that lottery-funded Kentucky Educational Excellence Scholarship (KEES) funds were awarded to just 5% of Black high school students, compared with 11% for need-based scholarships. In fact, more than half of KEES awards went to students from the richest families in the state.