# How the Lottery Works

The lottery is used to determine a lot of different things, from housing units and kindergarten placements to big cash prizes. The lottery has even been used by the National Basketball Association, where the lottery determines which college players will be drafted by the NBA’s 14 worst teams. Winning the lottery means the winning team gets to pick the best college talent in the country.

## Per capita spending by African-Americans on lottery tickets

Statistical data from GOBankingRates shows that Americans spend more on other things than on lottery tickets. In fact, they spend on average \$109 per month on other impulse purchases. Those purchases include scratch-off cards from vending machines and entries for Mega Millions and Powerball games.

Despite lower overall gambling rates, African-Americans spend more on lottery tickets than any other racial group. A study by Welte and colleagues in 2008 found that African-Americans spent an average of \$90 per person during a two-week period. That’s the equivalent of \$2,276 a year.

## Per capita spending by Latinos on lottery tickets

According to the Howard Center, Latinos in the United States spend more on lottery tickets than any other demographic group. The study found that Latinos outspend all other demographic groups by about 30%. The Texas Loteria, for example, has made scratch-off games the centerpiece of a \$3 million marketing campaign. This includes a focus on the ethnic market.

The study also found that lottery spending by Latinos is significantly higher than that of whites in the same ZIP codes. However, it is not clear why Latinos spend more than whites. The study used data from a company called SafeGraph that collects foot traffic data from six million stores in the United States.

## Impact of jackpots on ticket value

Lottery tickets are priced according to the estimated utility of winning the jackpot. The larger the jackpot, the greater the expected utility. The expected utility depends on the expected odds of winning the prize. A lottery ticket with a high likelihood of winning a jackpot is worth \$2.00, while one with a low probability of winning is worth a few cents.

It is not easy to predict when a ticket will win a jackpot, but there are several factors that affect ticket value. Bigger jackpots should increase the expected value of a ticket, but larger jackpots may attract too many players, decreasing the value of a ticket.

## Influence of oversight authority

There is a great deal of controversy surrounding state lotteries. Opponents of legalized gambling claim that state lotteries are a regressive tax and contribute to gambling addiction. They also claim that lottery advertising unfairly targets the poor and minority population. Others question the fairness of the lottery advertising and state lottery regulations.

President Bill Clinton wants to remove the vice president’s oversight authority of the lotteries and replace it with his own. However, the Vice President’s office denies any attempt to pressure gaming companies into donations. The vice president has been the deciding vote on the lottery board since 1993.