Lotteries: Playing to Lose

Written by: Alexander Dong (adong9)

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Lottery tickets — a game for which people are granted the opportunity to obtain a substantial amount of money from simply purchasing a piece of paper — is a form of hope and dreams for Americans. Adults ranging from those in high achieving career fields to newly arrived immigrants partake in the multibillion-dollar industry for the 1 in 303 million chance to “win big;” the embodiment of the American dream. Yet for all its ostensible glory, lotteries’ impact on the average American is far more than the fleeting hope for the jackpot; the institution of the lottery intrinsically targets the hopeful, the students, and the poor.

Misleading People

Everything about the lottery is designed to mislead the populace into spending more money. Even the positivity of slogan design has been correlated with increased revenues.

There is a slight positive correlation between the sentiment of the slogan and how much revenue is brought in; a testament to the psychological techniques used by companies to draw in the public.

Return on investment

When compared to other forms of gambling like betting, roulettes, and other forms of poker, the lottery’s return on investment is significantly lower. In the following figure, return on investment data from the lottery, along with similar gambling industries, is presented.

An examination of the graph reveals that the return on investment for the lottery is significantly lower when compared to its gambling counterparts. In the figure, a weighted payoff (the average payout per dollar spent) was calculated in order to quantitatively represent the return on investment for the forms of gambling seen on the x-axis. Non lottery-based strategies yielded weighted payoffs above .5. In comparison, none of the different types of lotteries exceeded .1. The only form of gambling less profitable by weighted payoff than the lottery — where the only method of earning returns is by winning — is slot machines, which have an abysmal weighted payoff of 0.0005. Better to eat your money.

Education

Commercial propagating the myth of the lottery’s supposed benefits towards education

Though the argument for lottery often touts the contributions that lotteries make towards education as part of its platform, the lottery-scholarship relationship only provides an opportunity to restructure funding to the detriment of education. For example, initial lottery legislation in North Carolina mandated that lottery earnings would be used only as a supplement, rather than a substitute, for educational funds. However, this was later removed immediately prior to passing — enabling the replacement of previously-allocated education funds with comparatively meager lottery earnings.

the lottery was implemented in 2005

In addition, there is the false (yet heavily implied) premise that the money obtained from lottery tickets contributes significantly to the state education funds. In actuality, only a relatively small portion of the lottery ticket revenue is allocated to public education, and the amount of money contributed to education is only a small fraction of the total fund. Watson, an associate professor at UNCC education school’s educational leadership program, stated that he often asks his students what the main source of North Carolina’s education budget is, to which many of the students reply “lottery.” In reality, the main sources of the budget are from the state’s general fund and local taxes. The lottery, by contrast, only represents 3% of education funding.

other includes fines and casino revenue among others

Targets Low Income Households

Furthermore, lotteries disproportionately impact low-income households and contribute to the growing wealth disparity that exists in the United States. Higher income individuals are more likely to invest in stocks as a means of generating more wealth, whereas low income individuals have less capital and therefore have no ability to efficiently invest. Thus, those with a higher household income have no incentive for the wildly variant nature of the lottery. The graph below demonstrates the relationship between an individual’s income bracket and the percentage of income spent on lottery tickets.

The sections of the graph present the percentage of income spent on four industries: the lottery, alcohol, gambling, and tobacco. Furthermore, this percentage is compared amongst four income brackets in ascending order. It is evident that individuals in lower income brackets spend a significantly larger percentage of their income on the lottery, alcohol, and tobacco. Additionally, the disparity between the lowest income group and the other brackets is the largest when it comes to the lottery; individuals in the 0–30k bracket spend over 13% on lottery tickets, whereas individuals in the 30–50k, 50–80k, and 80k+ brackets spend 3%, 1.2%, and 0.8% respectively. These statistics demonstrate that the burden of lotteries disproportionately impacts lower income households.

credit: npr

One explanation for why individuals of lower income households spend a larger percentage of their income on lottery tickets may be the prevalence of lottery vendors in lower income neighborhoods. The figure below depicts a map of New York City where the intensity of color indicates the median income for the region and the gray dots are representative of lottery vendors.

there is a high correlation between lottery vendors and low income neighborhoods (r² = .78)

For instance, the density distribution of lottery vendors in Long Island and Staten Island (bottom left and right regions, respectively) demonstrate a clear inverse gradient between income and vendor concentration.

Conclusion

Society may portray lottery tickets as little papers of hope and fun, when that is not the case in reality. An individual is infinitely more likely to lose money than earn a profit. According to John Oliver, the chances of someone winning is equivalent to the same individual getting struck by lightning and bitten by a shark at the same time. And ironically so, purchasing lottery tickets in hopes of one achieving the American dream may actively prevent them from doing so. Even winning the lottery is undesirable. 70 percent of people who receive a huge windfall will end up filing for bankruptcy in 5 years, according to the national endowment for financial education.

The lottery is a scum sucking bottom feeding industry that preys on people’s hopes and dreams. And should be eliminated as fast as possible. It is up with the all time great like big tobacco and the heroin cartels. Well at least with big tobacco they sold an actual product.

Sources

  1. https://www.cbsnews.com/news/who-buys-lottery-tickets-those-who-can-least-afford-them/
  2. https://www.census.gov/data/tables/2018/econ/state/historical-tables.html
  3. https://www.bls.gov/opub/ted/2019/how-much-money-do-americans-spend-on-lottery-tickets.htm
  4. https://www.bankrate.com/surveys/financial-vices-december-2019/
  5. https://www.cbsnews.com/news/who-buys-lottery-tickets-those-who-can-least-afford-them/
  6. https://finance.yahoo.com/news/luck-lottery-winners-gone-bankrupt-143026492.html
  7. https://www.betterhealth.vic.gov.au/health/HealthyLiving/gambling
  8. https://data.census.gov/cedsci/table?q=Table%20S1903%20%282005-2019%29&tid=ACSST1Y2019.S1903&hidePreview=false
  9. https://nccppr.org/asknc-percentage-lottery-money-goes-education
  10. https://www.publicschoolreview.com/blog/do-lotteries-really-benefit-public-schools-the-answer-is-hazy#:~:text=ABC%20Local%20reports%20that%20for,currently%20on%20the%20chopping%20block
  11. https://files.eric.ed.gov/fulltext/EJ809436.pdf
  12. https://www.taxadmin.org/2018-state-tax-revenue
  13. https://www.ednc.org/north-carolina-education-lottery-money-goes-to-education/
  14. https://data.world/data-ny-gov/2vvn-pdyi