OK, so we know that lotteries are machines designed to extract money from the poor and redistribute it to the middle and upper classes in the form of property tax relief, school funds, and merit-based scholarships. This is the point at which one of our friends on the right reliably steps in to remind us that no one points a gun at the poor and forces them to buy lottery tickets. This is indisputable. It also leaves us with the question of why people willingly participate in something that siphons off income they can scarcely afford to spare in exchange for catastrophically lousy odds of striking it rich. Anyone who is poor, has been poor, has close friends or family who are poor, or works in close contact with the poor understands that long term financial planning and rational money management are not traits the poor possess in great quantity. Accordingly many people simply conclude that the poor are not smart enough to behave in their own rational self interest. This is a common way of reaching our preferred conclusion that the poor have only themselves to blame for their predicament. In reality, of course, the poor know very well that state lotteries are screwing them. That doesn't stop them because the experience of being poor in the United States is little more than getting screwed repeatedly ad infinitum until all parties are completely desensitized to the act.
Lotteries are the [descendants] of older, informal, private-sector prize systems like "policy wheels" (often run by neighborhood merchants as a way of distributing money people would then use to shop) or numbers games (usually run by organized crime). It wasn't until the 1960s – New Hampshire in 1964, to be specific – that states legalized, and then dove headlong into, the lotto business. The key difference for consumers when control shifted from the black market to the public sector was that the odds got a lot worse and the payoffs got much larger. Oh, and the winners got the honor of paying taxes on their prizes. Yes, lotteries actually got more exploitative when the mob stopped running them. [emphasis mine]Those bolded sentences are enough to make one think the libertarians are on to something, except of course that the libertarians don't really seem to be willing to do anything to alter the fact that "being poor in the United States is little more than getting screwed repeatedly ad infinitum until all parties are completely desensitized to the act."
Therein lies the conundrum of the modern human condition: one may need to the government to keep from getting screwed repeatedly but the government may produce results more exploitative than the Mafia.