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.
Scratch-off blues
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.
Cherry.
Cherry!
Mule.
Crud!”
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!
Oh!
I'm ruined!"
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."
“Ok.”
“The government in this town is excellent
and uses your tax dollars efficiently.”
(Laughs)
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
income taxes.
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...
Education
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.
Can it?
"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."
Retailer scams
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,
right?
Of course not.
Lottery retailers scam people all the time!
This isn't some ingenious, number-running
business — it's a pretty simple con.
They just...lie.
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
the winnings.
"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
killed himself.
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.
Jackprot!"
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