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IS THERE AN EASY way to solve our financial problems? I doubt it, but that doesn’t stop people from trying. Initial public offerings, cryptocurrencies and hot stock tips come to mind. But they seem insignificant in popularity compared to lotteries.
My state currently offers 11 different draw lotteries and 63 scratch-off games. Several cost between $10 and $30 each to play. I consider lotteries an insidious tax, mostly on Americans who can’t afford it.
According to a 2018 Bankrate study, households in the lowest income bracket—those earning under $30,000—spent 13% of their annual income on lottery tickets. The highest earners, by contrast, devoted just 1% of their annual household income to playing the lottery.
Long-run investing has a much surer chance of paying off than do scratch-offs from the corner store. Yet people are so poor at probability that they believe a winning ticket may fall into their hands. One survey found 59% of millennials said winning a lottery jackpot is a reasonable way to fund retirement. Pure fantasy. The odds of winning the top Powerball prize are 1 in 292,201,338. The chance of being attacked by a shark is far greater, at 1 in 3,700,000 for Americans living near oceans.
The chance of winning a fortune from a scratch-off game is remote as well. Many of these games run for years. You could buy a scratch-off ticket not knowing that the top prize was awarded years before. Still, 60% to 70% of the $70 billion spent on state lotteries in 2014 was for scratch-off tickets.
Not that I’m entirely rational about all of this. I used to buy one ticket a week in three different games. Since then, I stopped playing all but one game, whose top prize rarely exceeds $5 million. For two bucks a week, I can dream.
As a route salesman for a beer distributer, my territory was inside one of Toledo’s poorer neighborhoods. Selling beer, cigarettes, and lottery tickets in a beaten down area is quite lucrative.
I would view the survey of millennials with a healthy dose of skepticism because it is well known that the wording of survey questions can have a large impact on responses. Although I didn’t have any luck trying to find the actual question that millennials were asked about winning the lottery, I did find an article about the survey that said almost 60% of millenials thought “winning the lottery could be a good retirement bet.” Note that, rather than agreeing that trying to win the lottery was a good retirement strategy, many respondents may have simply agreed that it was a good bet that winning the lottery would allow them to retire.
We know that sensationalism sells and I’m sure that the STASH website that published the study has been able to leverage it into widespread attention and website hits.
Lottery tickets have been replaced by cryptocurrency and meme stocks. The results will probably not be as bad – more than 1 punter in 300 million will make a lot of money. But most will still lose.
If you are good enough at punting, an NFL team will likely pick you up, negating the need for cryptocurrencies or lotteries. I’m not sure of the odds, though. (Percent college punters that make it to the NFL.)
I bought a weekly lottery ticket during the time my son was in college and receiving a scholarship funded by the lottery. I stopped when he graduated. I felt I was being hypocritical to follow my usual practice of avoiding gambling entirely. The fantasy of sudden riches does not overcome the reality of wasting money for me.
Richard, you’re not alone with your irrationality regarding lottery tickets. For a small price ($6, and infrequently at that), I gain a vicarious pleasure thinking that there’s a sliver of a possibility that I’m walking around with millions of dollars in my otherwise cheap wallet! That’s worth it for me, especially that it sometimes takes me a week or two before I check the numbers on the ticket.
My one game a week fantasy goes farther. As the prize rises I have the amount I will give to various people in my head🤑
I would like to sign up to be on this list of people