Facts about lotteries

The $29.8 billion Americans spent on the lottery in 1995 worked out to about $112 per capita. Today, per capita spending is up to $225 dollars a year. Again, part of that is the result of more states jumping on the lotto bandwagon.

These are per capita figures, accounting for every man, woman and child in the country. The average lottery player spends quite a bit more than that: If we subtract the 73 million people under age 18, and divide the remaining 250 million in half (since only 49 percent buy a lotto ticket in a given year), it works out to $600 a year in expenses for the average lotto player. Some survey data show that a disproportionate share of regular lottery players fall into low-income brackets.

…Massachusetts leads the nation with an astonishing $767 in annual per capita lotto spending. It’s followed by West Virginia ($594), Rhode Island ($513), Delaware ($421) and New York ($421).

Here is the story by Christopher Ingraham.

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Lotteries are a tax on stupid people. However banning them is not the solution, as with banning alcohol -- or hallucinogens. If something is banned it is seen as worth having, and goes underground.

I suppose what people are buying with their $600 is hope. But if that hope is turned into reality, then the old adage "you should be careful what you wish for" comes to mind. A lot of people who come into unaccustomed wealth do not know how to manage it and will not take advice. They are soon parted from it and are left with a life of regrets.

Lotteries are a tax on stupid people.

It's not a tax at all and the vast majority of people who buy a ticket are just amusing themselves. The stupid people buy 16 tickets and have a 'system'.

Oh please. The majority of lottery tickets are sold to people who meet the clinical definition of "problem gambling". The recreational buyers represent a small subset of the tickets sold.

After all have you ever listened to the advertising for the lottery? Somehow I don't here people marketing it as just entertainment.

The majority of lottery tickets are sold to people who meet the clinical definition of "problem gambling".

If the 'clinical definition' means buying lottery tickets every two weeks (the median frequency with which purchases are made among those of the lowest quintile who purchase tickets), than I suppose they are. Pretty stupid definition.

The nuts and bolts are:
An inability to stop gambling even when it contributes to significant impairment of the patient's ability to achieve other stated goals (e.g. martial harmony, job performance).

A strong habituation that results in distress when gambling ceases (often objectively apparent).

Breaking social conventions to enable gambling. Theft, deception, prostitution, etc.

Also I suggest you read again. The median lottery player does not buy the median lottery ticket. There are some very fat tails which result in lottery spending coming disproportionately from the minority who buy compulsively.

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"Hope" is a highly sought commodity in all its forms, something we should recognize and view as beneficial to many people in their pursuit of happiness. Charles Revlon made millions, once telling someone that while what he produced for purchase was cosmetics, what he was really selling was hope.

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“Lotteries are a tax on stupid people. However banning them is not the solution, as with banning alcohol -- or hallucinogens. If something is banned it is seen as worth having, and goes underground“

I agree that gambling in general probably should not be banned (though I certainly can see the other side of the argument). However, this doesn’t mean that our governments should be in the business of gambling.

Just like if you believe marijuana should be legalized it doesn’t follow that you think the government should produce, distribute and heavily market it.

"However, this doesn’t mean that our governments should be in the business of gambling."

In my state, the government is the only legal form of large scale gambling. I guess gambling is far to evil for private industry to have a hand in it.

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- 2016 GDP was ~2.43 1995 GDP
- 2016 lottery spending was ~2.44 1995 lottery spending
- 2016 GDP per capita was ~2.00 1995 GDP per capita
- 2016 lottery spending per capita was ~2.01 1995 lottery spending per capita

- https://data.worldbank.org/indicator/NY.GDP.MKTP.CD?end=2016&locations=US&start=1995&view=chart
- https://data.worldbank.org/indicator/NY.GDP.PCAP.CD?end=2016&locations=US&start=1995

Thanks, those are the answers to the questions I wanted to ask: the figures about current spending per player raise important questions. But the alleged increase from 1995 to today seems illusory.

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In inflation adjusted terms it's:

1995 = $112
2017 (1995) = $129

So a modest increase.

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State lotteries should be shut down and replaced by 'prize linked' savings accounts:

https://en.wikipedia.org/wiki/Prize-linked_savings_account

Politicians work themselves into states of high dudgeon over payday lenders supposedly exploiting low-income, financially unsophisticated customers but at the same time, they ruthlessly exploit the same people by running monopoly lottery operations with abysmal payout rates. And then, of course, to add insult to injury, they advertise them heavily, and tax the hell out of the few big winners, further reducing effective payouts. It makes me sick when I think about it. So I try not to. Anybody successfully running an illegal numbers game in competition with state lotteries and getting away with it is a hero in my view (seriously).

+1.

The heavy advertising is the real tell. How did we put ourselves in this perverse position? Appalling.

Well, clearly because growth is the only way to preserve liberty. Think of all the well paid advertising jobs created to help people decide to participate in lotteries.

It smells like victory (at least to some), to paraphrase the conclusion of a certain movie scene.

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But what if you're getting a payday loan to buy lottery tickets?

Just another benefit of the free market's approach to growth. After all, if you could not get that loan, you could not contribute to the growth of the economy that rakes off so much of the money that is never paid out to the winners of lotteries.

What does the free market have to do with a government running a predatory gambling monopoly?

Nothing, I just don't like the free market, so I try to imply it's responsible for all the ills of society. That and the Mercatus Center, of course.

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they ruthlessly exploit the same people by running monopoly lottery operations with abysmal payout rates.

They're not ruthless, just vulgar. For the vast majority of people, it's a minor expenditure and does them scant injury. The ill-effects of payday lending are more consequential. Also, we already have microcredit services in the form of pawn brokerages, so the additional utility provided by payday lenders is modest. The best argument for them is that they're safer for disorganized and impecunious people than trucking with loan sharks.

For the vast majority of people, it's a minor expenditure and does them scant injury.

Did you actually read the post?

"...it works out to $600 a year in expenses for the average lotto player. Some survey data show that a disproportionate share of regular lottery players fall into low-income brackets."

Sounds to me like the typical low-income lottery player is blowing enough money every year to cover one of those unexpected car-repairs that sometimes send people to take out payday loans.

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Maybe for each lottery ticket you buy you have to put $10 into a long term savings account?

Or maybe the lottery can simply be like investing in the stock market except the gains are all 10 times higher and the losses are whatever are required to payout the high gains. People might learn a little about investing as a result. (I would expect this to increase corruption in stock market, but this might be considered a plus currently.)

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In most states with a lottery, the profits from the lottery are supposed to help fund education, but the reality is that the legislatures offset the education appropriation by the amount of profits received from the lottery. In other words, the lottery is just a regressive tax. There's an analogue at the federal level: cuts in the progressive income tax offset by increases in the regressive payroll tax. That scam has worked so well that periodically the government debt doomsayers haul out increases in the regressive payroll tax as the solution to the rising debt. Not coincidentally, it's usually the same people who promote cuts in the progressive income tax. An aside, the winner of the $1.5 billion mega millions lottery has not claimed the prize. Indeed, billions go unclaimed in lottery prizes each year.

the lottery is just a regressive tax. T

It's not a tax at all. Your clients might benefit from a smarter and less condescending lawyer.

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Taxes in America are more progressive than in other developed nations. No VAT and lower payroll taxes.

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Payroll taxes are regressive because they fund pyramid schemes--err--"social insurance," not welfare.

Yes they directly fund benefits that are highly progressive

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What is missing is competition between lotteries. A famous economist once quipped that the best way to help poor people would be to cut cigarette taxes to = sales tax, double the lottery payout percentage, and halve the tax on winning. Competition could help with the second of these.

Your economist was lying. If you want to help the poor, get the hoodlums off the streets, take the incorrigibles out of the schools and remand them to detention centers run by jail guards, discontinue the collection of property taxes in slum neighborhoods, lower the minimum wage, spend more on VoTech schooling and less on half-assed academic schooling, and replace a bevy of subsidies and transfers with a general tax rebate capped at a certain % of earned income.

Perhaps it was "quickest and easiest "? You suggestions would help too.

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You forgot agricultural price supports and the ethanol mandate, both of which hit food prices directly, and food makes up a bigger percentage of the budget for the poor.

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The best thing about public lotteries is that it is a non-coercive, purely voluntary form of "taxation," or more accurately, means of raising revenues to operate the legitimate work government. The worst aspect is that it is shamelessly promoted by government, further promulgating lotteries' regressive qualities, attracting those who can least afford to spend money on them. Further emboldening the public sector while exacerbating the dependent class in the process is not an enlightened public policy.

The shameless promotion of lotteries is especially effective as advertising in small town newspapers, which eliminates any editorial objection to them.

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Hey wow, Tyler has noticed that (poor) people squander an incredible amount of money on a rigged game designed by politicians who know EXACTLY what they are doing and who they are hurting.

Ah well, what're ya gonna do. Shrug and keep voting Dem, I guess.

I am old enough to remember when conservatives liked lotteries because they were both a voluntary gamble and a voluntary tax. No libertarian coercion whatsoever.

At least that's what I remember when the lottery came to my state in 1984. Since then I have been rarely tempted. I have not given up my work ethic. I have not come down the slippery slope to gambling addiction.

If I don't like lotteries, it probably because like many of you I take a paternalist view that other people are harmed.

So good on your moral responsibility, but admit you are just acting like a big Democrat.

I don't expect governments to protect people from all their foibles, but I also don't expect them to *exploit* those foibles by offering a harmful addictive product, banning all non-government competitors (who traditionally offer less harmful versions of the product), and advertising the hell out of it to get people to spend as much as possible.

It would be like the government shutting down all liquor and tobacco companies and then going into the business itself, selling the most harmful, addictive versions of the products, and spending lavishly on TV advertising.

I don't think hating government monopoly lotteries makes me a big Democrat.

I was teasing a little, but it is a shift from what I remember, from the lack of coordination to a sort of paternalism.

Still, I might be open to outlawing gambling entirely ..

I really think that said coercion before my stupid tablet flipped it back to coordination.

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Lotteries are something where both side get a little something. Conservatives like that it's a voluntary tax that, theoretically could offset coerced taxes. Plus it kills some of the illegal gambling. The liberals like the revenue. Win-win.

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Still, I might be open to outlawing gambling entirely ..

Not *that* sounds like a big Democrat idea -- either the government should monopolize it or, barring that, nobody should be allowed to do it at all.

But one odd benefit of trying to outlaw gambling would be that then you'd only have the illegal numbers runners and they've always offered a much better deal than government lotteries, so I guess there are much worse 'big Democrat ideas' than that one.

Eyeballing the no-gambling states .. some look Republican.

https://www.gamblingsitesonline.org/casino/articles/10-us-states-with-worst-gambling-laws/

The funny thing about some of these morality issues is that it ebbs and flows, which party is supporting them.

I would imagine that both Utah and New Hampshire got there through a conservative religious path.

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anonymous/bear:

“if you want a law enshrining a government owned monopoly in gambling, then you’re a dirty libertarian!!”

Even for you this is dumb. CSU grad maybe?

Jfc

It is really a basic skill or SOP to Google first, so you don't hang yourself too far out to dry.

https://libertarianchristians.com/2011/09/12/the-lottery-is-the-best-tax/

https://thelibertarianrepublic.com/6-ways-fund-public-services-libertarian-republic/

Etc.

CSU graduate.

Google your way to bullshit.

Long Beach? Or SB?

1100 SAT? Inquiring minds

You sure love to lose hard.

Some libertarians believe that consistent adherence to libertarian doctrines such as the non-aggression principle demands unqualified moral opposition to any form of taxation, a sentiment encapsulated in the phrase, "Taxation is theft!" They would fund all services through gratuitous contributions, private law and defense user fees, as well as lotteries. Some libertarians support low taxes of various kinds, arguing that a society with no taxation would have difficulty providing public goods such as crime prevention and a consistent, unified legal system to punish rights violators. Geolibertarians in particular argue that only a single tax on the rental value of land, typically in conjunction with Pigovian pollution and severance fees to internalize negative externalities and curb natural resource depletion, are non-aggressive, non-distortionary, and politically sustainable.

https://en.m.wikipedia.org/wiki/Debates_within_libertarianism

Do you actually not understand what a government monopoly is?

Do you really think any “lottery” hit on a wiki page is the same?

Troll or retard, it’s genuinely hard to tell with you.

You should pay back the taxpayers for your Long Beach diploma.

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squander an incredible amount of money

Personally, I think it's money squandered, about $1,100 dollars worth per annum for the typical lottery playing household. That's not an 'incredible' amount, just a regrettable amount which could have been put in savings. (If I'm not mistaken, annual expenditures on car care are around $8,000 per household). People spend money on street drugs, on the drink, on the sex trade, on too much house, on too much higher education, and on divorce proceedings which leave every party worse off in every way (but do provide a living for lawyers). I'd give priority to lamenting that.

I could buy this if states didn't hire companies to make lotteries more attractive to buy or target sales efforts to the the most problematic users.

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A desperate populace grasping at straws to keep its hope. Such is life in America.

It is not true! Our President Trump, who has been praised by famous world leader Vladimir Putin of Russia, is restoring hope to the country and handling the situation. There is a new dawn rising in America. It is sad to see the anti-American propoganda on this blog.

The United States of America is as big as the Roman Empire at its height!

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The raw numbers are a little misleading. If you are spending that much on tickets, you are going to be pulling 3 numbers a few times a year. You'll still be out a lot of money, but not quite this much.

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My rule on lottery games is to only buy a ticket when the prize is >$400M and then only one ticket (even then I usually on play about 4-5 times a year). I have fun for the rest of the day thinking about how I will spend the money and then wake up the next morning to find out that I didn't win.

What is interesting is how Powerball and MegaMillions changed the construct of the games so that lowered the chance of winning, leading to much larger jackpots.

Speaking of rules, mine was skip a soda pop at lunch and buy a lottery ticket. It might actually be both more fun and less harmful.

+1 That's probably the best approach of them all.

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Buy 1 ticket ~= buy 100 chance if rounded at reasonable precision. Good on ya.

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My rule is to not buy a ticket, but hope I find the multi-million dollar Winning ticket on the ground. After all the chance of finding it on the ground is 99.9+% as likely as buying it.

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Gambling is a harmless diversion for most people, a destructive compulsion for a few. Running a numbers racket is not a proper public function. You have racetracks, bingo halls, Indian casinos, and OTB parlors. The last could be licensed to run numbers games as well.

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Where might congresswoman-elect Alexandria Ocasio-Cortez stand on the issue of state lotteries?

How much might her constituents spend annually and per capita on lotteries--more than $10 a week per head?

(Do tell: how many [Democratic] members of the NY state delegation to DC support the ABOLITION of state lotteries? how many [Democratic] members of the state legislature in Albany support the ABOLITION of NY participation in state and national lottery schemes? [Extrapolate for MA, WV, DE, and RI.)

(Comparisons welcome: how many Republicans [in DC and in respective state assemblies] from Southern states support ABOLITION of state lotteries?)

She's a federal official. Why would you expect her to be taking stances on the New York State Lottery?

For the benefit of her poor constituents if they're spending over $10 a week for lottery tickets, given the cost of living otherwise in NYC.

Surely her BU economics credentials (awarded cum laude) equip her to oppose predatory state lotteries: I do expect her inspiration to keep up with her credentials.

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I recently found out from America's premier news source that lottery winners names are published in the US. In Australia the government advises winners not to tell anyone on account of how our police officers are lazy.

If Kardashians, et al., with celebrity wealth can hire private firefighters, nouveau riche lottery winners can well hire their own private police officers and security details.

https://www.newyorker.com/humor/daily-shouts/l-p-d-libertarian-police-department

South Australia didn't exactly have a libertarian police force. They had no police force because they thought they had left all the naughty people behind. But for some reason the society failed to fully respect private property or individual's rights not to be punched by drunk people. If we'd known that would happen we probably never would have stolen the land from the black people living there in the first place.

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Hire private police in Australia? I'm not sure that will work. It's convicts all the way down here.

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Economists, correct me if I'm wrong. But it seems to me that buying one lottery ticket represents an extraordinary value.

Before you buy that ticket, your odds of having millions of dollars drop into your lap are one in an infinity - in other words, there is no possible chance in this world that it will ever happen.

However, for the price of ONE lottery ticket, you reduce the odds of having millions of dollars drop into your lap from one in an infinity, to one in (say) 300 million - a precipitous difference in odds that the average person could achieve in no other way.

That one dollar you spend on a lottery ticket takes the dream of effortlessly acquired riches out of the realm of the impossible, carries it across the chasm of the infinite, and drops it into the realm of the possible. I can't think of any other place where one single dollar accomplishes so much on such a cosmic scale.

However, the second dollar you spend on a lottery ticket, is a total waste of money, as is the third and all others - the vast gap of chance having already been crossed by your first dollar.

Yes. It's called the Law of Large Numbers, not the Law of Whatever You Got. Logarithms are too much for some people, though.

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In Pennsylvania, the state has a monopoly on hard liquor (sold thru "State Stores") as well as a lottery. What's next? How about state run brothels. It's the logical next step. It would also be a great opportunity for kids to work off their student loan debt.

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I am proud that the progressive states of NY and Mass are heavily reliant on the lottery to finance government while restricting competition in education so little Johnny can't do the math and figure out what a bad bet a lottery ticket is-- now that is what i call smart government.

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Julian Simon THE INSOUCIANT IMMORALITY OF GOVERNMENT
http://www.juliansimon.com/writings/Articles/LOTTERIE.txt

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