The lottery is a popular pastime for millions of people who spend billions of dollars each year on tickets. The hope is that they’ll hit the jackpot and change their lives forever. But it’s important to remember that the odds of winning are quite low, and there’s a cost to playing the lottery.

There are many reasons why states enact lotteries, but the one that’s often cited is their need for revenue. The argument is that, since gambling is inevitable, why not create a legal way to capture this money? The problem with this logic is that it overlooks the fact that gambling is not just costly, but also regressive. It disproportionately hits those with the lowest incomes. In fact, numerous studies have found that those from lower-income neighborhoods play the lottery at a much higher rate than their percentage of the population.

So why do so many Americans play? In part, it’s because of the myth that lottery proceeds aren’t tax money. This belief is supported by the fact that, unlike traditional taxes, the money collected from lottery tickets does not go into general state coffers. Instead, the money is used for specific purposes such as education and public works projects. This allows the public to believe that their ticket purchases aren’t a waste of money, but instead are actually helping the poor or the elderly or something else that is important.

Moreover, the nature of lottery operations makes it hard to evaluate their effectiveness. The process is often piecemeal, with a lack of overall oversight. As a result, lottery officials tend to make decisions without the benefit of public scrutiny or pressure. And the policies they establish are almost immediately subject to a series of changes as the industry evolves.

This cyclical process has led to a number of issues with lottery games, such as the fact that revenue growth typically spikes quickly when a new game is introduced and then levels off or declines. To keep revenues up, new games are introduced frequently. This can lead to an over-reliance on these revenues, which leaves little room for fiscal restraint if the economy falters.

The bottom line is that lottery money should be treated like any other public funds. It’s not necessarily a waste of money, but it is a form of taxation that disproportionately hurts those with the least to spare. And, as with other forms of taxation, the key is to understand the odds of winning so that you can make informed choices about whether to participate. NerdWallet is here to help you do just that! Check out our complete guide to the lottery. Then, sign up for a free NerdWallet account to get personalized tips and alerts about your money.