If you’re reading this, there’s a fair to good chance that you’re already pretty well versed on the basics of personal finance. You’re also probably physically attractive, highly intelligent, and very creative, to boot. But enough about the many positive traits of my readers. I bring this up because you’re probably smart enough to realize this already, but I’ll say it anyway: playing the lottery is a terrible method for becoming wealthy.
Again, you probably don’t need me to tell you all the reasons why putting down two dollars a day on a pair of daily tickets is a horrible ‘investment’, but if I didn’t, this would the shortest blog entry I’ve ever written. So, let’s start with one of the biggest ones: the odds against you winning are absolutely insane. MSN, while discussing and rebuking some other lottery myths, notes that the odds of winning the popular Mega Millions game (with a single ticket) are 1 in 135,145,920. To help put this in perspective, the odds of being struck by lightening at some point in your lifetime are estimated by the National Weather Service as 1 in 6250; you are over twenty THOUSAND times more likely to be struck by lightening than to win the Mega Millions game.
You’re probably already aware of these horrible odds; you might also have friends, neighbors, or relatives who, in spite of such odds, continue to buy lottery tickets. One reason they’re likely to cite is that the profits from the lottery program go to support some worthwhile cause. This is true enough, as far as it goes; rather than going to the local bookie or crime boss (or even worse, Donald Trump), proceeds from state lottery systems are often directed toward one or more worthy causes. In my home state of Pennsylvania, for example, roughly half the money taken in by the state lottery system is put toward programs for the elderly. It seems like a win-win; the elderly get more money and the people of Pennsylvania don’t have to foot the bill (unless they choose to buy a ticket). What could go wrong?
Well, the elderly (or other programs supported by state lottery systems) could actually get less money. A study of the proceeds of the multi-state Powerball game found that even in states where the money was supposed to go to a specific purpose, the state legislators directed other state funding away from the programs given lottery proceeds, leading to a net decrease in spending. A few years after the lottery has been established, the program receiving money from the lottery is getting less money than if it was still being funded from the state’s general revenue.
That’s just the start of reasons to avoid the lottery; depending on your beliefs, there’s any number of other reasons. Many religions consider gambling to be, at best, something their adherents should avoid, and at worst, a sin that nobody should engage in. You might also find the fact that most lottery players tend to be undereducated, poor individuals as a reason to oppose the lottery system. Also, the money that the states take in and put toward various programs (regardless of whether such contributions decrease the total amount those programs receive) comes out of the money returned to winners (aka, the people lottery players hope to become); you will have a higher percentage of the total money spent gambling returned to you if you go to a casino compared to buying a lottery ticket. (Although, even there you shouldn’t expect to win; the only game you can get a mathematical edge in, even in theory, is blackjack, and only then by counting cards. Try that in the casino, though, and see how long it takes them to toss you out on the curb.)
Finally, there’s the economic argument against lottery tickets. Let’s say you’re our two dollar a day lottery friend from before. If you play five times a week, 50 weeks out of the year (maybe you take off for two weeks each year for the holidays), you’ll be spending five hundred dollars a year. Keep it up for 40 years, and you’ll have put $20,000 into the state coffers. Had you invested that money at a relatively modest 8% rate of return, you could have had an extra $130,000 in your pocket at the end of forty years, whereas you’d be lucky if you saw any return from the lottery. (Even if you’re a more typical gambler, spending $150 each year, on average, putting that money into an investment earning 8% will leave you $38,000 richer in forty years; not as much fun as being able to say that you’re a lottery millionaire, perhaps, but also much more likely to leave you with something.)
Reasons To Play The Lottery
With all of this, you might think that I’m completely opposed to the lottery. That’s not the case at all; if you do it right, playing the lottery can be fun, as with most other forms of gambling (there’s a reason games of chance, in spite of rarely enriching the players, continue to be popular, even to this day).
You just need to keep a few things in mind as you play. First, play for fun; the chance you’re going to win is minuscule, at best (barring buying so many tickets that even if you win, you’re still going to be in debt), so if you can’t laugh when you lose, you should just stop playing. Second, only play with money you can afford to lose; there’s an excellent chance you’ll never see this money again, so don’t spend food or medicine money on lottery tickets. (I really wish I didn’t have to say this, but alas…) Lastly, if you can, play with friends/coworkers. Not only will you be able to buy more tickets without having to kick in more money yourself (improving your odds, however slightly), but it could also help your group to socialize more. My mother has been playing the lottery with her coworkers since I was a junior high student, and they seem to enjoy it, in spite of the fact that the biggest wins they’ve ever had were for a few hundred dollars. (For those of you who’ve never played the lottery, typically if you match some, but not all, of the drawn numbers, you’ll receive a smaller, usually pre-set monetary amount. Call it a consolation prize.)
There you have it, why the lottery is not a good route to wealth, and some advice if you do play. (For further tips, including suggestions on how to increase your odds of winning however slightly, consult the aforementioned MSN article’s second page.)