You may have a better chance of getting hit by a meteor than winning the lottery, but
that temptation to win the big jackpot is hard to resist.
"Three days wasted looking through 200,000 lottery tickets.”
“Those weren’t the lottery tickets.
That was a test.
THESE are the lottery tickets."
After all, what harm could spending a few dollars do when the right ticket could completely
change your life?
Well, more than you think.
Before you start buying weekly scratch-offs or planning the mansion you'll be buying with
your Powerball winnings, here are some lottery secrets you really oughta know...
Preying on the poor
States run their lottery programs because they consider it a harmless way to make money.
CNN reported that, in 2014, the citizens of the 43 states with a lottery spent a whopping
$70 billion on it…
More than all other forms of entertainment
"Which means Americans basically spent more on the lottery than they spent on America!”
But the spending isn't distributed equally through the classes.
North Carolina found the poorest counties had the highest lotto sales:
"Out of the 20 counties with poverty rates higher than 20 percent, 18 had lottery sales
topping the statewide average of $200 per adult."
In other words, poorer people are more likely to spend more money on the lotto, because
it represents a dream to get out of poverty.
The government isn't completely innocent in giving poor people this dream, either.
The lottery has been accused of targeting low-income communities through their advertisements.
"Can I ask you, if you won all the money, what would you do with it?"
“Bunch of hookers and cocaine.”
"Oh OK, that’s not good.
We were hoping for a different answer.”
A Carnegie Mellon study found that "lotteries set off a vicious cycle that not only exploits
low-income individuals' desires to escape poverty but also directly prevents them from
improving upon their financial situations."
So, states may be increasing their money flow, and that's good.
But they're doing it by keeping poor people poor.
That's not good.
People don't just get hooked on the regular, "pick your numbers" lottery.
Scratch-offs are huge business.
A common assumption is that since the payouts are smaller, the chances of winning are better.
But no: all lottery chances are objectively horrible.
“Down to my last lottery ticket.
In New York, the scratch-off with the best payoff averages a payout of 88 cents per dollar.
This $30 "Win $1 Million a Year for Life" ticket is so good, you'll only lose $3.60
every time you play!
That's still a lot better than the "Lucky Tripler," a not-so-lucky dollar scratch-off
that pays out only 59 cents on the dollar.
Most of the scratch-offs in the $1 to $10 range pay off around 61 cents per dollar,
making them at least the second worst investment idea ever.
"Aha, once again the conservative sandwich-heavy portfolio pays off for the hungry investor!
The lottery tax
If the government called the lotto by its proper name, sales wouldn't be soaring — because
the lottery should be called a tax.
For starters, according to a 2002 paper by Professor Ross Rubenstein of Georgia State
University, the lottery basically taxes you just for playing:
"Although purchases of lottery tickets are 'voluntary,' the implicit tax on a dollar
spent on a lottery product is not voluntary, just as sales taxes paid on purchased goods
are not voluntary."
But some analysts go even further and argue that the lottery itself is a tax, working
the same way as an income tax or a property tax.
Only instead of an income tax, where the government gets paid proportionately to what people make,
the lottery taxes the poor by a ridiculously high margin.
"I have a joke for you."
“The government in this town is excellent and uses your tax dollars efficiently.”
States have a pretty good incentive to keep this going.
In 2009, 11 states made more money from the state lottery than they did from corporate
In Rhode Island, the lotto brought in more than twice as much as corporate taxes.
But it's all worth it if you hit the jackpot, right?
Well...even then the state governments get a juicy payout.
Anyone who wins more than $600 will get the thrill of paying a 45-percent tax.
Then...at least all that tax money is going to a good cause?
Not so fast...
Okay, so the lottery's not good for poor people, but it's helping schools, so we can't get
rid of it.
Think of the children, right?
The California Lottery alone raised $1.39 billion and gave $97 million to the Los Angeles
Unified School district for the 2014–2015 school year.
This can't possibly have a downside.
"They've used it for things like supplies, laptops, even tools for an automotive class."
"Sockets, ratchets, wrenches, pliers...”
Except that of course it has a downside.
Often, the money goes into the state's general fund.
From there, the money can be used for anything, which means the income from that "Education
Lottery" doesn't always end up in schools.
Even when states do allocate lottery money to education, legislators can factor all that
sweet lottery cash into the budget and start giving out fewer government funds.
In the end, education spending stays exactly the same — or gets worse.
According to Russ Lopez, the spokesman for the California Lottery:
"The California Lottery was created to supplement public schools.
Not to totally fund public schools, not to resolve all their problems.
[...] So we don't do a lot for schools; it's a modest contribution."
Okay, the odds aren't great, and the wrong people are targeted, and schools don't actually
get much of anything.
But at least lotto winners get the fun of cashing in their tickets with no problems,
Of course not.
Lottery retailers scam people all the time!
This isn't some ingenious, number-running business — it's a pretty simple con.
Retailers will often take the winner's ticket and say, "This isn't a winner."
Then, the retailer keeps the ticket and cashes in the winnings.
It's not quite a brilliant scheme, but it works.
Several states have had to conduct sting operations on retailers where customers have complained.
The undercover cop gives the clerk a "marked" ticket and arrests them when they try to claim
"They found the store owner did scam the developmentally disabled woman out of her lottery winnings."
Sure, that undercover cop might not get the same bragging rights as the guy who, say,
infiltrated a Mexican cartel, but it does curb the rampant scamming.
Winning to lose
Even if everything else is bad about it, at least the lottery gives a new lease on life
for the few lucky ones that defy the odds and win millions.
Except, people don't usually do well with a sudden fortune.
Forbes reports that a third of lottery winners end up bankrupt, and many more suffer from
increased rates of depression, divorce, and suicide.
That's not to say that every lottery winner throws all their earnings away, but a lot
of them do.
Billie Bob Harrell, Jr. is a particularly sad example of winning gone wrong.
Harrell won $31 million, and only 20 months later he was broke and divorced, and eventually
Before he died, he said, "Winning the lottery is the worst thing that ever happened to me."
Man, the lottery sucks.
If you want to feel like a winner, there's a much better option out there:
“Make sure the mushroom’s on top, and you put it in the hole.
Then just wait.
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