A fifth of Americans believe that winning the lottery is the most practical way for them to accumulate large savings, according to a 2006 survey by the Consumer Federation of America. More recently, a 2019 survey conducted by the investment app Stash found that about 40 percent of respondents, including 59 percent of millennials, think that winning the lottery could be a good way to fund retirement.
Powerball and Mega Millions jackpots have gotten much larger in recent years because both lotteries reduced the odds of winning. In 2015, Powerball added more numbers to the drawing, dramatically decreasing the chance of winning the jackpot, from 1 in 175 million to 1 in 292 million. The odds of winning the Mega Million jackpot are even lower: approximately 1 in 302 million.
Lottery is basically a form of additional tax you get to choose not to pay.
Five myths about the lottery [WaPo]
“The lottery’s only objective is to maximize the funds you pay for educational activities.” [VAULT45]
December 30, 2019
One should remember that the only objective for the Lottery, anywhere in the world, is not to make you rich. Contrary to their advertisements, the objective is not to show you a good time. Wasting your money is never a good time. The lottery’s only objective is to maximize the funds you pay for educational activities. The lottery does this by taking all of the proceeds, then first diverting nearly 45% of it towards educational benefits, and also towards store commissions and advertisements designed to trick you into spending more into the system. Say you played 292 million times with hypothetically a $1 ticket, and then won exactly one time. In this case your reward would not be anywhere close to $292m. The funnel would start at a gross level of just 55% of $292m (or a loss of $131m on your ticket purchases since 45% was skimmed straight away to the government). And then your net amount would still be less than this 55% gross payout, since this reward is again taxed as income. There is nothing sexy about this arrangement; it extorts a non-tax deductible dollar from you and many others, who could least afford it. And each time putting offering 55 cents into a community savings jar, until one day that amassed jar is given to basically just one person at random (but not before the government comes back to tax that jar as “income”). The whole scheme is an educational tax for those who instead could use a free education in probability theory.
A loser’s lottery [StatisticalIdeas]
April 26, 2016