Take a Chance?

Richard Quinn

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.

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