What is the lottery? There are many thoughts when it comes to the lotto. Some consider the lottery gambling, others think of it as entertainment. I actually heard someone call it an investment once. Crazy, right? The saddest one I’ve ever heard is that the lottery is their last chance. I agree with Dave Ramsey, “Gambling [lottery] is a tax on the poor and people who can’t do math“.
Lottery players who earn $13k per year spend an average of $1100 of their income per year on tickets. They contribute 82% of all lottery revenue! (Cornell University)
According to a study conducted by Cornell University [PDF link], “the poor are relatively more likely to see the lottery as a financial investment, and relatively less likely to play for entertainment”. A survey by the Consumer Federation of America and Primerica (1999) indicates that the poor are more likely to view the lottery as an effective financial investment tool.
The odds of winning the lottery jackpot can vary widely depending on a number of factors but according to Wikipedia, in a 6-from-49 lotto the odds are 1 in 13,983,816. To put this into perspective; If a person buys one lottery ticket every week for 250,000 years they would probably win one time. Mega Millions is even twelve times harder to win (1 chance in 175,711,536). The problem? Lottery players aren’t doing the math.
Have you ever heard this statement, “Why not play, someone has to win”? Please don’t take financial advice from this person. We’ve all heard the stories of lottery ticket winners going broke years after the huge windfall and I’m going to tell you how to avoid being one of those poor souls – GUARANTEED! Ready? DON’T BUY THE TICKET.
Side Note: State Governments are fully aware of the effect and financial impact the lottery has on the poor but lotteries are a very lucrative source of state revenue. Shame on the Government for taking advantage of lower income citizen’s ignorance and desperation. Don’t even get me started about the casinos.