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Why You Should Never Play the Lottery

Tumbling lottery balls
Photo by dylan nolte on Unsplash

I'll never forget the afternoon when my then-girlfriend told me she bought lottery tickets.

"Well, everyone else is doing it, so I figured why not?" she told me.

I was less than pleased.

You see, this was a time when we were both financially struggling. I was earning $15 an hour (before taxes) at a receptionist job in San Francisco. She was making a similar amount through tutoring. However, her job required her to visit clients individually, which costs both gas and time. I don't know how often she worked, but it was definitely less than 40 hours a week.

We shared a small in-law unit in San Francisco that cost $1,600 a month plus utilities. It was a pretty tightly packed space that consisted of a bedroom, kitchen, and bathroom.

Needless to say, we weren't exactly doing well financially.

"You might as well just flush that money down the toilet," I said, exasperated.

"It's not that big of a deal," she replied. "It's only $20."

I sighed and dropped the issue. Sure, $20 wasn't that much, but it wasn't nothing either. There were many months when she asked her family members for some help paying rent. When they couldn't send any more money, she asked for my help.

It wasn't the $20 that upset me. It was the fact that she barely had any money to spare but still spent it on a losing investment. We were so tight on money that we had to make every dollar count. We'd worry about everything from parking tickets to leaving the bathroom light on for too long.

That being said, one lottery ticket purchase isn't the end of the world. However, the lottery hurts people more than it helps them and the people it hurts are often the most vulnerable, to begin with.

What Are The Odds of Winning?

You have a higher chance of being hit by a meteor than winning the Mega Millions or Powerball. Yet, data from the U.S. Census Bureau found that half of Americans play state lotteries, with sales reaching $71 billion in 2017. That means Americans spend more on the lottery than movie tickets, sporting events, books, music, and video games combined.

Graph shows that Americans spent $70.5B on lottery tickets in 2017
Source: North American Association of State and Provincial Lotteries

If you were to divide that number by the number of adults in the 43 states where the lottery is legal, you'd find that the average U.S. adult spends about $300 a year on the lottery. The numbers vary depending on the state, with Rhode Island coming in at almost $800 per capita. South Dakota, Massachusetts, West Virginia, and Delaware all follow closely behind with numbers above $600 per capita.

Graph showing that Rhode Island spends the most per capita on lottery tickets
Source: North American Association of State and Provincial Lotteries

Part of the reason people spend so much is that individual tickets cost so little. A few dollars here and there doesn't seem like a lot at first but can add up exponentially over time. Similarly, someone who struggles with their diet might justify eating "just one donut" or "only one candy bar" before noticing the adverse results.

Unfortunately, the vast majority of lottery tickets are a waste of money, and the people buying them are the ones who can least afford it.

Who Plays the Lottery?

While many people play the lottery, poorer households tend to play it disproportionately compared to other groups. One survey from 1999 found that those who make under $10,000 a year spend $597 on the lottery annually, representing 6% of their total income.

In the 80s, a study from Duke University found that one-third poorest households contribute to half the lottery ticket sales in America. A more recent 2011 study from the Journal of Gambling Studies found that those in the lowest one-fifth of socio-economic status spent the most on lottery tickets than others.

Sadly, these attitudes still prevail in modern times. A 2018 Bankrates survey found that 28% of households making under $30,000 annually play the lottery at least once a week and that 10% play it three times a week.

Playing the lottery once a week amounts to about $412 a year on the vice. The survey also found that lower-earning households spent about 13% of their income on vices such as prepared food and drink. Comparatively, the higher-earning households (defined as earning at least $75,000 a year) only spend 2.6% of it on vices.

Unfortunately, many cash-strapped Americans who live a life of hardship see the lottery as their only way out of a desperate situation. With stagnant wages and rising unemployment and inflation rates, the financial future looks incredibly bleak.

Even one-fifth of millennials say that the lottery is integral to their retirement plan.

So what else turns someone into a gambler?

One study from 1990 found that lottery players tended to be young people with poor education and low income. Heavier gamblers tend to fantasize more about winning – something which we can reasonably assume drives their habits. For them, winning the lottery is their way to escape poverty and finally live the life they've always wanted.

Second, most lottery outlets are found in minority communities with a greater chance of becoming a gambling addict. Research shows that Blacks and Hispanics play the lottery more often than Whites and spend more per game. A Duke University study from 1999 found that the heaviest lottery players – defined as the top 20% – were most likely to be male (61.4%), Black (25.4%), and a high school dropout (20.3%). The study also found that Blacks spent $998 on lotteries annually per capita, the highest number of any ethnic group.

Those who were age 65 and above and divorced or widowed were also the highest spenders.

The state is perhaps the only real lottery winner. In 2015, state lotteries generated $66.8 billion in gross revenue, much more than the $48.7 billion from corporate income taxes. The lottery is responsible for about 1% of all state revenue. Sometimes this money goes towards schools, environmental projects, Medicaid, or other valuable expenditures. Unfortunately, it still means bad news for the vast majority of lottery players who lose their hard-earned money chasing the American Dream.

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