Powerball Dreams, Systemic Financial Trauma Realities

A last minute trip to the gas station before the gym, I think to myself “what if?”

Group chats buzz with “what would you do if you won?” “If I gave you the money and you won how much would you split with me?” and dreams of a better future. A collective electricity fills the air as the Powerball jackpot climbs into the billions. With odds of winning at roughly 1 in 292 million, the spectacle has less to do with probability and more to do with possibility.

But the frenzy isn’t just about hope or entertainment, it’s a reflection of something deeper and more painful. Something I refer to as institutional or systemic financial trauma, one of the six sources of financial trauma I reference in my book Overcoming Financial Trauma, (Wiley,2025).

What Is Systemic Financial Trauma?

Financial trauma is often understood at the personal level with the shame of debt, the anxiety of unpaid bills, the panic when the car won’t start and you can’t afford the repair. But systemic financial trauma–or institutional financial trauma–runs deeper. It is the emotional and psychological reaction to the policies, institutions, and cultural narratives that perpetuate financial harm.

It’s not just about struggling with money, it’s about how the system itself was designed to condition us to live in scarcity, instability, and fear while also constantly consuming in an attempt to escape it. It’s about the marginalization of the many, to benefit the few. It’s about how institutions codified this harm so that it’s barely noticeable or appears to be a public benefit for all.

The System’s Hand in Financial Harm

Systemic financial trauma doesn’t emerge in a vacuum. It is the product of deliberate policy choices and institutional practices that have harmed communities for generations:

• Predatory Lending: From payday loans with triple-digit interest rates to subprime mortgages targeted at Black and brown families, lenders have systematically extracted wealth from those with the fewest protections. The 2008 financial crisis, for example, was no accident. It was the result of institutions profiting from vulnerable borrowers, leaving entire communities in ruins.
• Redlining: For decades, federal housing policies and banks denied mortgages to Black families in certain neighborhoods, starving them of the single most powerful wealth-building tool in America: homeownership. The legacy is staggering—today, the average white family has nearly 10x the wealth of the average Black family according to the Federal Reserve. While the red lines are no longer considered legal, policies, taxation, gentrification, and funding resources reflect the ghosts of this practice in the present day.
• The War on Drugs & Mass Incarceration: Policies that disproportionately targeted Black communities devastated families, stripped away generational wealth, and created cycles of incarceration that ripple across generations.
• Criminalizing Homelessness: More recently, proposals like President Donald Trump’s call to ban homeless encampments and criminalize unhoused people continue the pattern of punishing poverty instead of addressing its root causes.

These are just some of the examples systemic and institutional forces create where an environment normalizes scarcity and for many, hope feels like it can only come from outside the system and not within it. Which may explain why millions turn to Powerball tickets as an improbable lifeline.

The Lottery as a Trauma Response

Morgan Housel, in The Psychology of Money, points out just how skewed lottery participation is: “The lowest-income households in the U.S. on average spend $412 a year on lottery tickets, four times the amount of those in the highest income group. Forty percent of Americans cannot come up with $400 in an emergency, yet spend that amount on lottery tickets each year.”

This is not irrational when viewed through a trauma-informed lens. Financial trauma pushes people toward the fight, flight, freeze, or fawn responses which may look like the following:

• Risk-seeking: chasing improbable outcomes over slow, stable progress.
• Magical thinking: believing one lucky break will heal decades of financial pain.
• All-or-nothing urgency: the same binary survival thinking trauma hardwires into our nervous systems.

While lotteries are marketed as a public good for the schools, for the roads, etc., they function as a sort of voluntary tax that extracts billions from those least able to afford it, funneling money back into state funds rather than reinforcing local stability.

From Numbers Games to State Lotteries

I did some digging to understand why Powerball resonates so deeply, and found parallels that explain the lottery’s cultural roots, particularly in the Black community.

In the early 20th century, the “numbers game” flourished in Black neighborhoods. Known also as “policy,” this underground lottery was more than a gamble, it was one of the only financial institutions accessible to marginalized communities excluded from mainstream banking, a systemic root.

Historian Matthew Vaz notes, the numbers game was “the biggest Black-run business in Harlem, and the biggest employer”. What started as an illegal racket that supported Black businesses eventually became a model co-opted by the states. New Hampshire launched the first legal state lottery in 1964, reframing it as a way to fund public programs. The difference? Where numbers games circulated capital locally, state lotteries extracted it. What had once been a community lifeline became a government revenue stream.

This pivot is a textbook example of systemic financial trauma with the state criminalizing economic activity when it benefited Black communities, then legalizing and profiting from the same model when it benefited the state. We see this trend present across industries including the cannabis industry when the previous war on drug initiatives contributed to the mass incarceration of Black and brown people but now serves as a booming industry in recreational states across the country.

Systemic Financial Trauma’s Double Edged Sword

Of course, some people do win. But the aftermath often reinforces the same lesson: money doesn’t heal trauma. The Certified Financial Planner Board of Standards reports that nearly one-third of lottery winners file for bankruptcy within a few years according to Next Gen Personal Finance. There are also unverified reports that suggest lottery winners are more likely to file for bankruptcy than nonwinners within three to five years.

There is clearly a behavioral pattern that suggests that sudden wealth can magnify unresolved financial trauma whether that comes from lottery winnings, professional athletes sign on bonuses and salaries, and entertainer advances. Poor financial boundaries, survivor’s guilt, impulsivity, and familial pressures don’t disappear when a jackpot hits, they intensify.

Then there are taxes. Federal withholding and state taxes can take a billion-dollar jackpot down to half or less after lump-sum reductions and taxation. For many, this may be of no consequence due to the large payout. From a systemic harm lens however, it can feel like an insult to injury because even when you beat the odds, the system takes its cut first.

The Collective Cultural Daydream of Escaping

Why, then, do people keep playing? My best guess is that it’s because the lottery taps into America’s favorite story of rags-to-riches.

For those with intergenerational financial trauma, winning is about more than money. It’s about rewriting long held family financial narratives, escaping cycles of poverty, or proving the system wrong. But without healing, trauma simply reproduces itself. More money without transformation doesn’t break the cycle, and the myth that only those struggling financially are impacted by financial trauma is quietly broken.

The Powerball frenzy is a mirror. It reflects:

• How systemic harms like predatory lending, redlining, incarceration, and criminalizing poverty fuel desperation.
• How lotteries extract wealth from the poorest while selling hope.
• How even winners struggle when financial trauma remains unaddressed.

At its core, the lottery teaches us this: people aren’t chasing billions as much as they’re chasing safety, stability, and dignity.

While I won’t argue that more money can certainly solve many people’s problems, what’s needed is a trauma-responsive approach to financial systems, education, and personal healing that restores agency, builds resilience, and invests in community dignity.

The Powerball jackpot may crown one or two winners. But the biggest winners, time and again, are the systems that profit from the collective desperation of those harmed by them. Until we address systemic financial trauma, the dream will always be rigged.