Most people love to gamble, and everybody hates taxes. So when I say the lottery is a tax, albeit voluntary, it creates mixed emotions. How dare I criticize the beloved lottery?

I dare because the lottery is an unfair bet, and because the lotteries promote themselves by talking about all the money they give to towns and cities. Actually, of course, lotteries take more money out of towns and cities than they give back. They give about one-fifth of the money they take from the people back to towns. The rest is used to pay off bettors, pay lottery sellers, and pay administration salaries and expenses.

My numbers are from the Massachusetts lottery because that is where I live. Ours claims to be one of the better lotteries. It might be:  for every dollar bet, it gives back 73 cents to the bettors and 19 cents to cities and towns. Only two cents are used for administration costs and salaries (which range up to $175,000.) That 73 cents going back to bettors looks pretty good, but that isn’t the reality of an individual bet. In the Mass Cash game, for example, the chance of a person winning the top prize of $100,000 is 1 in 324,000. If it were a fair bet, the chance of winning $100,000 on a dollar bet should be 1 in 100,000.

Chances of winning in other games are way worse. In the popular Powerball game, for example, the chance of winning $100 with a two-dollar bet is 1 in 36,000. A fair bet would have the chance of winning $100 with a two-dollar bet be 1 in 50.

However, when the big jackpots get big enough, a two-dollar bet can be fair or even better than fair. Example: the probability of winning a Mega Millions jackpot is 1 in 302.5 million. Since the bet is two-dollars, when the jackpot gets to 605 million, a two-dollar bet is a fair one. Except that the cash you would get is only about half of that because of taxes, so the jackpot has to be really be about 1.2 billion before it’s fair.

Aside from such huge and rare jackpots, day in and day out, you play the lottery, you lose. The more you play, the more you lose. Never mind the folks who tell you they win “all the time.” They fib or fantasize. My grandfather, for example, liked to go the track and bet on the horse races. He always said he won, yet my dad always had to give him money for his track adventures.

 Why do people play to lose? We’ll come back to that. First, a very short digression into lottery history.

Lotteries go way back. Google says the first recorded public lottery in the West was held during the reign of Augustus Caesar for municipal repairs in Rome. The first recorded lottery to distribute prize money was held in 1466 in Belgium, for the announced purpose of providing assistance to the poor. In America, the Continental Congress voted to use a lottery to raise money for the War of Independence. Ben Franklin tried to use a lottery to raise money to buy cannons for the war.

In the thirties and forties, in Youngstown, Ohio, where I grew up, adults could play what was called the “Bug.” It was a lottery run by the local mafia, and the mob didn’t let kids like me play so I don’t know what it cost to buy a ticket. A quarter, maybe? The winning numbers were the last three digits of the day’s volume on the New York Stock Exchange. The game had a good reputation for honesty and good payouts; lots of people played the Bug.

But not my father. His rule was “Never gamble with anyone who makes a living at the game.”

The first state lottery was in New Hampshire in 1963 when that state, instead of levying taxes, used a sweepstakes to raise money for education. Now all but five states have lotteries, and they are big business. In 2017 Americans spent $73.5 billion on lottery tickets. That’s about $230 per year for every person in the country. And state lotteries are good business; The Massachusetts lottery had a profit of $1,105,437,864 in 2022. They even call it a profit. That’s 1.1 billion dollars per year, and growing. State lotteries are the most common type of gambling in the country, with about half of those polled saying they bought a lottery ticket in the past year.

The state lotteries are professionally marketed. Their web sites are colorful, bold, and glitzy. They offer something to appeal to every kind of player: instant gratification, all manner of games, and life-changing prizes. But for those who play, all the games are losers!

Lottery web sites will tell you about the games and the winners, but they won’t tell you about the winners who end up losing everything they won and more, and they surely won’t tell you about the fates of problem gamblers. These are people who are psychologically unable to stop betting. When they lose, they try to make it up by playing more, and so lose more. There are true stories of people who have lost everything – marriage, home, job – playing the lottery.

Now back to Why do people do it even though the odds are way against them so they are sure losers? They do it because the enjoyment they get from playing is worth more than the cost of the lottery ticket. It’s fun to contemplate winning, especially those big ones. Even I play when the jackpot gets large enough that my two-dollar ticket is a fair bet. It’s worth two bucks to fantasize about what I would do with a billion dollars. It’s fun; I just don’t think about all the trouble it would cause me.

I watched a man come out of a store with a handful of scratch tickets. He sat in his pickup for ten minutes scratching away. He didn’t win, but he was having fun. To him, the fun was worth the cost. He’ll do it again tomorrow; maybe he’ll win something.

The lottery is a tax. (Regressive, too.) You give your money to the state and let them do what they want with it. So what that they give 19% back to your town; you could give a 100% to your town if you wanted. Why don’t you? Because that’s no fun. Dreaming of winning is fun.

As my dad said: Don’t gamble with someone who makes a living at the game. The lottery is making a big profit at the game.

Just Sayin’.

Leave a comment