Buying a ticket can feel routine. Put the same ticket behind the words “Enter to win,” however, and the chance to obtain it can suddenly feel more compelling, as though winning carries more value than buying.

That reaction may make it seem as if the lottery itself creates the excitement. Economist Judd Kessler says lotteries are often evidence that demand was already high.

“The reason they’re having a lottery in the first place is because there is what economists would call excess demand,” Kessler told Fortune. “More people want the thing at that price than can be served.”

In that sense, lotteries frequently reveal demand rather than create it. They also show how the method used to allocate access can shape the way consumers experience the same good, whether the scarce item is a theater seat, a restaurant table, a visa, a park permit or a chance to buy into a limited offering.

Businesses Do Not Always Remove Scarcity

Kessler, a professor at the University of Pennsylvania’s Wharton School and author of Lucky by Design, describes lotteries, restaurant lines, waiting lists and Ticketmaster queues as “hidden markets”: systems for allocating scarce goods without simply increasing prices until demand declines.

A long line outside a restaurant can itself communicate something to consumers, Kessler said. “Lots of people want this thing at this price. That means maybe I should too,” he said.

Companies dealing with excess demand have several choices. They can raise prices until fewer customers are willing to pay. They can allocate access on a first-come, first-served basis. Or they can preserve hidden markets.

Some sellers deliberately maintain those systems instead of raising prices because scarcity can generate excitement and reinforce future demand, Kessler said. That choice can keep the posted price lower than it might otherwise be, but it does not eliminate competition for access; it shifts competition into time, attention, flexibility or chance.

The attraction of winning is not limited to saving money. Kessler said that feeling is part of what hidden markets produce.

“The winners get the feeling they got something that other people wanted, that they couldn’t get,” he told Fortune.

Broadway lottery entrant Ella Hozhei has experienced that reaction directly. Because she lives in New York and can be flexible about dates, she regularly enters drawings as a less expensive way to attend shows she wants to see.

Hozhei said paying less than full price allows her to take chances on productions she is not certain she will enjoy. But for the Stranger Things stage production, she was especially excited and bought tickets as soon as she learned she had won.

“It made me feel like I had been chosen to see the show,” Hozhei told Fortune.

Lotteries are also used for other highly anticipated opportunities. Last month, Fidelity said it would use a lottery to allocate shares of the anticipated SpaceX IPO among retail investors if demand exceeded its allotment.

Governments Use Lotteries for Different Purposes

Governments often use lotteries to distribute limited opportunities more equitably, rather than to build excitement around a product.

The federal government uses a lottery to allocate a limited number of Diversity Visas each year to applicants from countries with historically low rates of immigration, rather than awarding them on a first-come, first-served basis. National parks also use lotteries to manage access to high-demand destinations, including The Wave in Arizona.

New York City uses lotteries to allocate affordable housing. This past week, the city also announced that it will distribute 500 free tickets to the 2026 USA Track & Field Outdoor & Para National Championships through a lottery, alongside discounted tickets.

Mayor Zohran Mamdani said the ticket giveaway is intended to make the championships more affordable and accessible.

The announcement follows a similar initiative earlier this year, when Mamdani offered New Yorkers the opportunity to purchase 1,000 World Cup tickets for $50 after criticizing FIFA’s soaring ticket prices.

Kessler said government lotteries are guided by what he calls the “three E’s”: equity, efficiency and ease. In public programs, that means the design of the lottery matters as much as the decision to use one: eligibility rules, application processes and allocation procedures determine who can realistically participate.

“Loterries, if designed properly, are a very good way of doing those allocations,” he said.

This story was originally featured on Fortune.com: https://fortune.com/2026/07/26/lotteries-winning-vs-buying-value-scarcity-demand-hidden-markets/