Introduction
The chance of winning is 1 in a million, yet the agents selling lottery tickets are crowded every evening. The Indian lottery market is estimated to be around $33 billion annually and is projected to grow at an average annual growth rate of 5.1%. Presently, it is legal to sell lottery tickets in 10 states with Kerala being the first India state to operate a state run lottery in 1967 with the main motive behind the decision being generation of revenue and employment. Gambling applications faced a similar situation, having emerged in the early 2010s by 2024 they had garnered a respectable ~$3 billion market value up until a ban was placed upon them in October 2025. The reason behind this ban being the harm online gambling had inflicted on nearly 450 million Indians, triggering suicides among many due to the startling figure of over 200 billion rupees being lost owing to such platforms. Despite this, companies like Dream 11, which does not necessarily market itself as a Gambling application but has the same aspects of one, had even managed to secure a sponsorship deal with the Indian cricket team. The stated facts present us with a paradox, why despite knowing the risks associated with lotteries and gambling applications do people still choose to spend money on them and why the government has allowed them to persist for so long?
Lotteries as a revenue source
One of the main reasons the government still allows for state-run lotteries to continue is the revenue generated from them. If the winnings from lotteries exceed ₹10,000, the tax placed on them as per Section 194B of the Income Tax Act is 30%. The revenue surges when we consider the tax placed on purchase of lottery tickets as well, where 40% GST is levied for the same. In the case of Kerala alone where on average 1 crore tickets were sold per day, we can see how lotteries can play a big part in the revenue of states.
Behavioural Economics of Lotteries and Gambling
Lotteries act as a seller of hope for people. They act as a source of buying dreams or an escape from poverty. The “Illusion of Control” or “Overconfidence” is prevalent when people buy lottery tickets, believing that they have a higher chance of winning than they actually do. The same goes for when a person gambles. The excitement and thrill of gambling and gambling serving as an escape from negative emotions like anxiety are the two main reinforcements of why an individual gambles. Even when an individual ends up losing money, they get fixated on recovering this loss and may end up incurring more losses over time. This behaviour is referred to in psychology as “chasing losses” and is a common problem among gamblers leading to increased gambling. For individuals who engage in chasing behaviour, a withdrawal from gambling may be perceived as “kicking the luck”.
Gambling Applications & Digital Spin
Nowadays the popularity of applications like Dream11 and Winzo is at its all-time peak. These applications market themselves as “skill-based gaming” giving users hope that they have chances of winning just on the basis of their skills. However, this is often not the case as a large part of their chances depends on luck alone, not skill. A tool they use to increase the addictiveness is the use of micro-bets instead of large sums of money. They lure users by allowing them to place small bets like ₹10 or ₹50 making them more addictive than traditional gambling or lottery systems. Behavioral economics suggest that small and repetitive bets can produce an addictive reinforcement loop, forcing users deeper into debt for small wins. There is also a moral and ethical dilemma as these applications are heavily promoted towards minors by IPL sponsorships and television ads leading to them developing a gambling problem early and blurring the line between sport and gambling.
Inequality Angle
Various studies done on lotteries & Gambling show that individuals living in areas where GDP per capita is higher have lower odds of succumbing to Gambling or Lottery addiction. Additionally, it is found that individuals living in more resource deprived areas, may be more prone to gamble as they believe that their self-worth is enhanced through Gambling-related wins or may turn to gambling when they believe that economic prosperity via traditional methods is unlikely. Another explanation for the relation between income inequality and gambling is that individuals living in unequal societies may feel resentful and angry towards their situation, leading them to turn towards Gambling as a coping mechanism.
Regulation Policy
The Central Legislation that governs the issue is The Public Gaming Act of 1867 it is regarded as being highly outdated and does not account for digital or online forms of betting. Under the Lotteries (Regulation) Act of 1998, only State governments are allowed to conduct Lotteries provided that they follow specific conditions like transparent procedures, daily draws and funds are used for social welfare purposes. There is strict prohibition on private lotteries. Currently, 10 Indian states organise state run lotteries, some of them are Kerala, Maharashtra and West Bengal. For online Gambling, Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2023 was introduced to regulate the sector. However, in October 2025, The Promotion and Regulation of Online Gaming Bill was passed imposing a nationwide ban on real-money Gambling applications.
Conclusion
In conclusion, the continual participation of people in Lotteries and Gambling Applications reveals a deeper paradox at the intersection between human behaviour and economics in India. Despite there being large amounts of proof and studies being done to disapprove these activities as being normal, still people continue to participate in them as can be seen from the revenue generated by them. Driven by hope and desperation, individuals often fail to see how slim chances they possess of actually winning something. We come back to the question proposed in the introduction, why the Government allows Lotteries to persist knowing the dangers they propose. In the eyes of the Government, Lotteries and Gambling Applications present a hugely lucrative opportunity, as can be seen by the volume of ticket sales in Kerala, but from a social welfare and moral sense of view we cannot deny that support or a lack of opposition paints a situation of State complicity. The Government knowingly continues to show lack of significant opposition towards Lotteries. Recognising the evils of Lottery and Gambling, mere prohibition may not be a correct response to the problem but, developing ways to regulate the sector in an ethical, transparent and economical way that benefits both the State and the Citizens becomes the main hurdle which the Government should look to tackle.
Bibliography
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