Playing the lottery can be fun, especially when the potential payout is enormous. For as little as a dollar or two, you have the potential to become a billionaire. And the lottery is also big business.

According to the North American Association of State and Provincial Lotteries, which represents 53 lottery organizations across North America, U.S. lottery sales totaled more than $113 billion in 2023. A portion of the revenue goes to the prize money while the rest is routed to the state or city to fund a variety of essential services, so even if you lose, your community can win.

Does it make sense to spend your money on lottery tickets, though? That depends on your financial circumstances and if you get more out of the game than it costs.

How Lotteries Work

The lottery is a type of gambling. It is currently permitted in 45 states, Washington, D.C., Puerto Rico and the U.S. Virgin Islands. States that don't have lotteries are Alabama, Alaska, Hawaii, Nevada and Utah.

Having a lottery in place can be a financial boost for the jurisdiction, since the money it earns goes toward services like public schools, park maintenance, veterans programs and pensions for city workers – or it gets deposited into the general fund.

As a player, you can buy a lottery ticket for as little as a buck or two, though you can also buy tickets in higher increments for a bigger pay out. There are two basic varieties of lottery tickets:

Although both of these options are available in physical form, 19 states allow you to play the lottery online as well, where you can purchase digital versions of the game.

Odds of Winning the Lottery

In general, scratchers offer players higher odds of winning than draw lotteries because the prize value can be very low, like $5 (though it can also go up to thousands of dollars).

According to statistics published by the Iowa Lottery, the overall odds of winning at least something with a scratcher ticket are about 1 in 3.41.

On the other hand, the odds of winning with a draw lottery ticket are considerably lower. Powerball reports the odds of players winning even a $4 prize by matching a single number is 1 in 38.32, but is falls to 1 in 292.2 million if you were to match all six numbers.

The grand prize can be the stuff of daydreams, though. The largest Powerball jackpot was for the California lottery in November 2022, with a cash award of more than $2 billion.

Reasons People Play the Lottery 

A 2023 Empower Money Talks study found that 71% of Americans have purchased a lottery ticket. But with such low odds of a major payout, why would you spend your hard-earned money on a lottery ticket?

“From a rational standpoint it may seem like a poor purchase,” says Robert Johnson, chartered financial analyst and professor of finance at Heider College of Business, Creighton University.

"But the entertainment value of buying a lottery ticket may actually make the purchase one that makes sense in terms of economic theory,” he adds.

Buying a lottery ticket can be worth the expense simply because it provides an element of fun. The odds of winning may be infinitesimal, but it gives the ticket holder an opportunity to fantasize about what they would do with the winnings and how their life would change if they got lucky.

Dr. Fern Kazlow, a New York City-based clinical psychotherapist, says a few other factors go into why people play the lottery, despite such slim chances.

“People who tend to play the lottery a lot tend to have an interesting paradox,” Kazlow says. “They are optimists, believing they can win, but may not have that same optimism about other aspects of their financial life. It's different from someone who is an entrepreneur. When they want to make more money, they double down with business. This is more about hope.”

Regular lottery players may diminish the losses and concentrate on the times they did win. That attitude, Kazlow says, keeps them coming back to try again.

“It’s a social thing too,” she says. “They may play at the same local store they always buy from, with other people who are also playing. This happens more with scratch-off tickets. There is something rewarding in the uncertainty. It’s exciting. People are looking over other people's shoulders, and there’s immediate gratification when you win, even if it’s a small amount of money.”

Marketing Behind the Lottery 

You can’t win if you don’t play, right? Besides, it’s around the same price as a cup of coffee, if not less. Someone has to win, so it may as well be you. And with so many other people taking their chances, you don’t want to be the only one not even trying.

That’s exactly the feeling lottery organizers count on, says Adam Ortman, consumer psychologist and president and founder of Kinetic319, an advertising agency based in Denver.

“Lottery marketing campaigns expertly capitalize on fear of missing out – FOMO,” Ortman says.

"The narratives of prior winners and dreamers of wealth are crafted to show how ordinary lives can be dramatically improved through a single ticket, tapping into the aspirational desires of the audience,” he adds.

“The portrayal of winners enjoying newfound wealth and happiness creates a compelling emotional appeal, making the possibility of winning seem both attainable and life-changing,” Ortman says.

When the grand prize rises, more people play and the prize continues to escalate. It’s on the news, radio, billboards and online, plus people are talking abut it, asking others if they’ve purchased their tickets yet. As more zeros are added to the figure, the frequency of the messaging increases.

Additionally, lotteries often emphasize the simplicity of participating.

“By presenting the purchase of a ticket as a minimal investment with a potentially massive return, these campaigns reduce the perceived risk while magnifying the reward,” Ortman says.

"This dynamic is central to triggering FOMO, as individuals are motivated by the fear of missing out on a rare opportunity to drastically improve their circumstances," he adds.

And it works.

“Oh I’ve definitely bought a couple tickets,” Kazlow says. “I’ve seen the big numbers, then I want to get in on the possibility of winning, too.”

How to Play the Lottery Responsibly 

Considering jumping into the lottery game? Review your finances first, then plan for the indulgence.

“Budget, budget, budget,” Johnson says. “Set a dollar value on a weekly or monthly basis and stick to it. People get into trouble when they consider playing the lottery for anything other than entertainment.”

Keep track of how you're feeling, too. If it’s becoming more of a compulsion than a joy, stop. Be aware of danger signs.

“Never gamble with money you don’t have and can’t afford to lose,” advises Kazlow. “If you can’t stop buying tickets from specific stores, don’t go in. Put up red flags for yourself.”

The lottery may seem innocuous, but it’s still gambling and it can definitely become an addiction.

Making matters worse for people who have trouble playing the game in moderation is the ability to purchase tickets from a computer or mobile device.

According to Statista research, revenue in the online lottery market is projected to reach $5.74 billion in 2024, with the expected number of users to grow to 14.7 million by 2029.

“Online lottery platforms have several responsible gambling controls in place,” says Alexander Korsager, chief gaming officer at Casino.org. “You can set deposit limits, take breaks or even entirely self-exclude. Unfortunately, this isn't possible if you're buying tickets in a store. So, you'll need to set budgets to keep your lottery spending in control.”

Korsager emphasizes that betting on the lottery should only be for fun. If you find yourself playing out of necessity, or it's no longer recreational, walk away.

If you can’t, and are concerned about gambling addiction, seek help. The National Problem Gambling Helpline is open 24 hours a day, seven days a week at 1-800-GAMBLER.