As somebody who lived as a professional gambler for a while, I would agree that your assessment of value of most lotteries is correct: they are poor value and should be avoided.
However, we're not expecting people to deploy Kelly criterion here, nobody is playing lotto for EV and a need to maximise returns on known value parameters.
But I play lotto. And I know all this more than most. I have literally paid my rent with money earned from understanding this and exploiting it. WTF am I doing playing poor odd games?
When you're playing $5k to win $5k on something where you think true odds are more like 55% in your favour, you are doing so most likely knowing $5k is 10% of your total bank (based on Kelly), and that you're 45% likely to lose. You're going to hopefully play over and over again and in the long run make money.
When you're playing $2 to win $100m, do you actually care?
The $2 is likely such a tiny part of your bank that you could literally lose it down the back of the sofa and not care, but the payout is so large and life-changing, that not having access to that very remote possibility - given the cost is so tiny and marginal and unnoticeable - is short-sighted.
Yes, the maths don't work from a probability angle, but arguing that playing the lottery is a tax on ignorance is juvenile and short-sighted. Optimising your bank at that level is like trying to make sure you don't leave a single grain of rice on your plate at dinner.
The maths of starting a business are pretty harsh, the costs of failure are higher and yet still, many people choose to do it. Are they fools? Perhaps. But they consider the cost and potential payouts to be worth it.
See the bigger picture from time to time.