From literacy to lotteries | Kerala’s descent into state-sanctioned gambling

Kerala’s lottery model recycles poverty into revenue, while offering little in return but false hope.

A society begins to decay not when it loses wealth, but when it sells false hope to its own poor. Kerala — the state that led India in literacy — now leads in dreaming of winning lotteries.

According to 2022-2023 numbers, Kerala’s per-capita legal lottery sales are by far the highest in India: roughly ₹3,300 per resident per year (₹11,892.88 crore divided by ~3.58 crore people), compared with ₹75 in Punjab and ₹6 in West Bengal in recent years. On countless corners, queues form not for wages but for a miracle. Each ticket is a whisper of deliverance; each draw, a ritual of disappointment. This is a dystopian psychological experiment gone wrong, where luck displaced hard work, wiring itself on the blind hope of the impossible happening.

The psychology of chance, not choice

For many young Keralites, the lottery has become the first ‘business’ they know, and the last hope they trust. Behavioural science explains the slide: the near-miss effect convinces the brain that failing is ‘almost winning’, while the gambler’s fallacy whispers that a win is ‘due’. These mechanics spur repeated play — especially when odds are opaque, and draws are frequent.

Among adolescents, simply buying lottery tickets correlates with higher problem — gambling severity and more permissive attitudes to gambling; these aren’t abstract lab effects, they reshape habits, crowd out initiative, and erode investment in skills.

Kerala’s lottery arithmetic

In 2022-2023, Kerala’s State Lotteries fetched ₹11,892.88 crore, a staggering 78.67% of the State’s non-tax revenue — an extraordinary dependence for a polity proud of egalitarian ideals. Behavioural economists have found that lottery spending falls as income rises, and estimate people would spend almost 43% less on gambling if they reasoned statistically rather than intuitively; for that, you need full disclosure by government and informed decision-making by citizens — both lacking in Kerala.

Public-health authorities across the globe now treat gambling harms as population-level burdens — with mental-health, family and financial fallout — requiring systemic controls and ring-fenced treatment funding. Kerala’s lottery is an expensive machine that burns ₹90-₹92 of every ₹100 on prizes, agents’ discounts, and commissions, printing, publicity, and administration, leaving only a sliver for the exchequer, while society absorbs the debt, distress, and despair.

In practice, we recycle the poor’s rupees back to themselves minus a cut, yielding little public benefit and large private harm. The only reliable outputs are addiction, over-indebtedness, and a slow erosion of initiative — the very opposite of welfare.

Karunya without the lottery

Kerala does not need a lottery to fund Karunya. In the last five years, the Karunya Benevolent Fund (KBF) disbursed about ₹544 crore in medical aid, with a fresh ₹49.3 crore sanctioned recently; KASP, the insurance arm, received the rest of the Karunya allocations.

In 2022-2023 alone, nearly ₹7,000 crore went as prizes and well over ₹3,700 crore to agent margins — before departmental costs — simply to ‘earn’ headline sales (sales total and prize-share/commission rules). Put plainly, a small fraction of what we now burn to run the lottery each year could fund KBF many times over — without selling false hope to the poor or fuelling addiction.

The house always wins

Lotteries are engineered to ensure the organiser never loses. The prize pool is set below total ticket sales, with the remainder carved out for the exchequer, distributor/agent discounts/commissions, administration, and taxes. In other words, the administrator wins by design; buyers, as a group, lose by design. International evidence is unambiguous: state lotteries typically return only 40-60% of gross sales to players as prizes — far lower than other games of chance — so the expected value for buyers is negative even before considering taxes and travel/time costs.

In India, the effective tax on winnings is ~31.2%, plus surcharge for very high prizes, further lowering expected returns for those few who do win. Kerala’s own scheme architecture confirms structural skims: official prize-structure notes set distributor/agent economics by ticket discounts and prize-linked commissions, locking in margins upstream of any prize payout

On top of this, GST on lottery tickets has been increased to 40% in 2025 — a move Kerala opposed, but which nonetheless underscores how much of every rupee paid by the buyer will never return as prizes. Those who buy tickets are told they are ‘competing with one another’ for the jackpot; the truth is starker: collectively they are funding the organiser. A tiny fraction of buyers is compensated disproportionately; the vast majority underwrite the loss. Purchasing that thrill may be a luxury for the affluent. Exposing poorer citizens to that engineered thrill — until it becomes habit or addiction — is a cruelty. An ethical lottery administrator would, therefore, constrain participation to those who can afford to lose; a credible regulator would insist on that.

The Kollam signal

Kollam is both a mirror and a message. The NCRB data show the highest suicide rate in India — 48.6 per lakh — in Kollam city. In parallel, unofficial district-wise compilations of Kerala lottery results (aggregated from public draw PDFs) list 2,338 prizes ≥ ₹1 lakh won in Kollam — among the highest tallies statewide. Because high-value wins are statistically proportional to tickets purchased, the prize density is a strong proxy for high local sales. Correlation is not causation; yet, the coexistence of very high suicide incidence and intense lottery participation is a red flag demanding epidemiological study into debt stress, fatalism, and self-harm.

Odds, fatalism, and the audit of hope

Globally, jackpots are vanishingly rare: one in 13.98 million in a standard ‘6/49’ draw, one in 292.2 million in US Powerball, and around one in 622 million in Italy’s SuperEnalotto. If Kerala insists on lotteries, it must at least tell citizens the truth: publish an annual ‘Winnability Audit’ detailing tickets sold, prize-tier odds, payout ratios, and a district- and income-band breakdown of winners — so people can decide with eyes open and researchers can track harm.

Gambling choices

Goa’s casinos are run by private licensees under a state licensing regime; the government’s role is to regulate and collect licence fees, GST, and allied taxes from operators serving largely affluent tourists and patrons. Kerala, by contrast, is itself the operator: the state lottery department designs, markets, and sells lottery products, and the exchequer’s income comes directly from citizens’ purchases — a mass transfer of household money to the exchequer, mediated by luck.

In principle, a state lottery should redistribute opportunity; in practice, Kerala’s model monetises addiction and vulnerability — low-denomination, high-frequency tickets that normalise repeat play among those least able to afford losses. If gambling revenue must exist at all, ethics demand the opposite: restrict play to high-ticket, low-frequency formats for those who can afford such thrills, and keep mass gambling out of the daily financial lives of the poor.

What the UK model teaches us

Britain’s Gambling Act 2005 sets three licensing objectives that every operator and authority must pursue: prevent crime and disorder, ensure gambling is fair and open, and protect children and vulnerable persons from harm. The UK Gambling Commission enforces these via Licence Conditions and Codes of Practice (LCCP) on fair/open conduct, age-verification, marketing, technical standards for random outcomes, and detailed data reporting.

It runs national self-exclusion systems (for online, GAMSTOP) and works with advertising regulators to prevent youth targeting, and require socially responsible messaging. Enforcement is visible: compliance reports, penalties, licence suspensions, and evolving financial-risk checks to spot harmful spend patterns.

Kerala can legislate these same objectives, create an independent regulator with the LCCP-style licence conditions, mandate RNG and winnability certification for every product, set up a state-wide self-exclusion register, and publish an annual compliance/enforcement and harms report. In parallel, if Kerala ever contemplates tourist-facing discretionary gambling, it can adopt Singapore-style entry levies to shield residents while tapping luxury tourism.

Policy clarity

The path is clear — and humane. Enact and publicise a winnability and harm audit each year, phase out low-denomination, high-frequency draws that reach vulnerable youth, replace them with premium, low-frequency draws with strict KYC so participation is purely discretionary, and ring-fence a public-health levy on gross gaming revenue for debt-counselling, addiction treatment, and family support — administered outside the lotteries department.

Above all, separate operator from regulator: a State department that runs lotteries cannot, by definition, self-police impartially. In a democracy, a State-run lottery must be the most ethical; without independent oversight, the pressure to maximise revenue will always overwhelm dharma.

Kerala has never been shy of moral leadership. It built a reputation by expanding human capability, not exploiting human vulnerability. Today, its lottery model sadly replaces effort with expectation and fleeces the most fragile emotion of all — hope.

Goa’s casinos are private, licensed, and tourist-facing; Kerala’s lottery is public, mass-facing and extractive. If there must be gambling, let it rest on privilege and informed choice, not poverty and ignorance. If there must be hope, let it be cultivated through work, skills, education, and enterprise — not as false hope sold across a lottery counter with a government stamp on it.

Prasanth Nair is a civil servant and author.

(Disclaimer: The views expressed above are the author's own. They do not necessarily reflect the views of DH.)