It's not clear that's the case. My own intuition would be that demand for lotteries is inelastic because of scope insensitivity. There's essentially no differen

It's not clear that's the case. My own intuition would be that demand for lotteries is inelastic because of scope insensitivity. There's essentially no difference between a $7 ticket for a chance at winning a $400M prize, and a $7 ticket for a chance at winning $500M prize. I would speculate that people will spend a fixed amount on lottery somewhat irrespective of the odds. That also means that liberalizing lotteries wouldn't particularly help most poor either... I do see one potential for a lottery that could diminish lottery spending. A lottery that you pay for only once in your life, and that automatically enters you for a daily drawing every day, for the rest of your life. The odds of winning would be adjusted accordingly, but people would still get the thrill everyday that today, maybe, they could win.