Powerball and the American Culture of Inequality
On September 12, 1964, Paul Cordone of Gloversville, New York won the biggest lottery jackpot in American history. The previous year, New Hampshire became the first state to legalize a state-operated lottery, selecting winners through a complicated system that involved two separate raffles and a horse race to ensure the results weren’t rigged. Like thousands of New Yorkers, Cordone had crossed state lines for a chance to buy a lottery ticket, and he returned to New Hampshire in September to watch the results firsthand. After his designated horse came through, Cordone became one of six winners of the first legal lottery in the post-World War II period. His reward? $100,000.
This past January, Powerball captured national attention with a record-setting $1.5 billion prize. Millions of Americans bought tickets for a chance at the jackpot, with the Massachusetts Lottery reporting approximately 10,000 tickets sold per minute twelve hours before the drawing. After January, the Powerball grand prize very quietly went over a month without a winner, with the jackpot rolling over to $265 million for the March 2nd drawing. While three players shared the January jackpot, just one player selected the six numbers for last week’s Powerball, defying the one-in-292 million odds for a life-changing financial windfall.
With Americans purchasing record quantities of lottery tickets over recent months, millions have invested considerable hopes in their lottery numbers: What sequence of birth dates, anniversaries, or lucky charms might unlock the code to an unimaginable fortune? What many should consider, too, is how jackpots got so big: How did we get from awarding six-figure sums to the recent frenzy-inducing jackpots in a mere fifty years?
The history of the nation’s swelling lottery prizes reveals a great deal about the modern American economy. Specifically, the current popularity of lotteries illustrates something about how Americans have responded to the increasing inequality and social immobility of the late twentieth century.
Lottery jackpots expanded slowly. Northeastern states legalized the nation’s first lotteries in the late 1960s and early 1970s, but both sales and prizes remained relatively low. This was due in part to the enduring popularity of illegal numbers games in urban African-American communities and because most lotteries offered infrequent drawings and expensive tickets. States such as New Jersey improved on this model, but throughout the 1970s lotteries nonetheless failed to meet expectations that they would serve as crucial revenue-producers to balance state budgets. In the summer of 1984, however, a series of rollover seven- and eight-figure prizes bred “lottomania” in New York, Massachusetts, Illinois, and Michigan. In Illinois, Michael Wittkowski won a record $40 million jackpot, with 14,000 tickets sold per minute in the days before the drawing. The craze over these massive prizes demonstrated to lottery commissions across the country the value of massive, improbable jackpots in capturing popular attention and drawing in new players.
But most state lotteries could not offer large prizes on their own. In 1985, Maine, Vermont, and New Hampshire jointly formed the Tri-State Lottery to provide larger jackpots and win back players who had begun traveling to New York and Massachusetts to buy lottery tickets. Two years later, lotteries from five small-population states and the District of Columbia formed the Multi-State Lottery Association (MUSL) to jointly offer Lotto*America, renamed Powerball in 1992. After opening with a $2 million jackpot—a sum that would grow as drawings passed without winners—Powerball’s base prize increased as more states joined MUSL. With all 44 state lotteries offering Powerball, MUSL raised its starting sum to $40 million in 2015. What had been a record payout in 1984 became a minimum jackpot just 30 years later.
The trend towards steadily increasing lottery prizes represents a curious feature of modern American culture. To attract players, lotteries opted not to increase the number of prizes—so that players would feel that buying a ticket represented a good investment—but instead to make prizes larger and less probable. This had been a tactic of lotteries for centuries, as endorsed by Alexander Hamilton in his 1793 tract Ideas Concerning a Lottery, “Every body, almost, can and will be willing to hazard a trifling sum for the chance of a considerable gain,” Hamilton wrote. “Hope is apt to supply the place of probability and the Imagination to be struck with glittering though precarious prospects.”
Yet the timing of lotteries’ rapid increase in jackpot prizes proves crucial. State lotteries emerged at a time when traditional meritocratic means of upward mobility no longer worked for many Americans. Due to deindustrialization, stagflation, globalization, the rise of the service economy, corporate centralization, and increased wealth concentration among a small percentage of people, financial stability—not to mention upward mobility—declined for many Americans in the 1970s and 1980s. Nonetheless, perceptions of opportunity remained high. In those decades, over 80% of Americans reported that they saw “plenty of opportunity” in America. That figure remained above 50% in 2013, the same year that 76% of Americans admitted that they were living with little to no savings. In 1978, sociologist Michael Lewis presciently deemed this phenomenon a “Culture of Inequality.” Lewis described a cultural climate that celebrates an individual’s ability to achieve success even as actual economic conditions limit available opportunities. “Irrespective of what we believe,” Lewis argued, “there simply is not much room at the top.”
The importance of this economic context for the surging lottery sales of the 1980s and 1990s was acknowledged by no less than Victor Markowicz, former executive for GTECH, the world’s largest lottery corporation. In a 1988 editorial in Public Gaming International, Markowicz wrote that “the business opportunities that once allowed people in America to get rich are shrinking … Everybody needs a dream. The lottery is a vehicle for the realization of that dream. Because of the downward trend in self-made wealth, there [is] less and less competition with the lottery to be the potential provider of the dream.” History has proven Markowicz correct, as a large number of Americans have turned to lotteries as a means of advancement following the failure of more traditional means. In a 1992 sociological survey of an anonymous midwestern city, nearly 45% of respondents stated the most likely way they could get rich was through winning the lottery. In 2010, Americans ranked lotteries just behind standard modes of upward mobility such as a high paying job or starting their own business as the most likely way for them to get rich. “Whatever happened to the Great American Dream?” one woman asked a Los Angeles Times reporter in 1986. “Every mother’s son could be President, or a doctor or a priest. Now it’s ‘When I win the lottery.’”
Today’s massive lottery jackpots indicate how Americans have responded to an unequal economy that no longer provides opportunity for many low-income people. Thus, despite the common condemnation that lotteries represent a “stupid tax” or a “tax on people who are bad at math,” lottery playing represents a reasonable and rational response to an unequal society that praises each individuals’ ability to get ahead. Despite enduring celebrations of America as a land of opportunity, for many the infinitesimal hopes of a lottery jackpot represent the best chance of striking it rich. Certainly, lotteries do not belong on the modern commercial landscape. They prey on poor gamblers while providing a relatively minuscule source of state funding. Yet criticizing lotteries themselves is missing the forest for the trees. Lotteries might not be so popular, and might not be so problematic, if poor, working-class, and middle-class Americans felt financially stable and if the traditional economy provided them with access to the American Dream.