The Mega Millions lottery jackpot recently topped $1 billion, while the Powerball has reached more than $850 million. Large jackpots have become conversation pieces, fueling a lottery culture that permeates the nation — and influences more people to buy even more tickets.
Recall that the Powerball lottery jackpot hit $1.765 billion on the Oct. 11, 2023, drawing, with a person in California holding the winning ticket. That is 17 followed by 8 zeroes. For nearly everyone, one billion dollars is an unfathomable amount of wealth. Of course, if the winner opts for a lump sum payout of $774 million, they will still end up with around $487 million after federal taxes (California does not tax lottery winnings).
Powerball and Mega Millions effectively operate as national lotteries. They are available in almost every state, providing millions of dollars of revenue to state coffers. Only a handful of states opt not to participate. For example, Alabama, Alaska, Hawaii, Nevada and Utah do not offer Mega Millions tickets.
Lottery tickets sales continue to grow. In 2022, New York state had over $11 billion of lottery ticket sales. To put this into perspective, in 2021-2022, New York state collected just over $18 billion in sales, excise and user taxes.
So where does lottery revenue money go?
Lottery commissions like to laud lottery revenue generated for “good causes.” States report that such funds support public schools and other public causes. A typical example is the Iowa Lottery. Their “About Us” page offers the following “feel good” opening sentence: “Since the Iowa Lottery's start in 1985, its profits have helped make Iowa a better place to live, work and raise a family.”
Yet do the ends justify the means?
There are no free lunches. State lottery commissions play a sleight of hand with lottery-generated revenue. Money to support public schools that come from state income or sales taxes are then freed up for other state-supported activities.
The concern is that lotteries are a highly regressive tax. The people who can least afford to buy lottery tickets are the people who contribute most to their sales. This places a financial burden on lower income earners, effectively taking money from them and using it to add to state revenues.
Some will argue that lotteries are harmless entertainment. Spending a couple of dollars on tickets a few times each year when the jackpot grows to astronomical levels is benign fun.
That may be the case for people who have sufficient excess income to waste. But people who are struggling to afford healthy food, safe shelter, utilities and reliable transportation spend hundreds of dollars each month, chasing a dream that remains out of their grasp.
It becomes even worse when the jackpot grows into the hundreds of millions or billions of dollars. Sales during such drawings spike into the hundreds of millions of dollars, with the large jackpots used as a marketing tool to attract people who almost never buy tickets and entice regular lottery players to buy even more. The October Powerball drawing had over $258 million in sales. That was then dwarfed by the $550 million in sales when the jackpot hit $2 billion on Nov. 7, 2022.
Yet the daily and weekly lottery players continue to generate roughly $10-$20 million in sales at each drawing. Those are the people who have the most to lose — not just when the jackpot spikes. Even when they do win, the amount of money they take home is overshadowed by the amount of money they spend to achieve such winnings.
What our country has developed is a lottery culture, which normalizes the act of people buying lottery tickets to win large amounts of easy money. This culture has contributed to the gambling culture, particularly sports gambling. More states are legalizing sports gambling, particularly online gambling, making it possible to place bets from your smart phone in real time.
Sports books like Caesars Sportsbook and BetMGM entice people with free bets to gain their interest and their business. For some, this is pure entertainment. For many, especially young men, this gambling culture may be seeding addictions that will be difficult to overcome.
Rational thought rarely, if ever, will convince regular lottery players to pass on buying a ticket at each drawing. Their worst fear is that the numbers that they always play will be picked on the very drawing when they stop buying their tickets. Yet for every $2 Powerball ticket, just 32 cents is returned on average to them for the non-jackpot prizes. The payout is even worse for Mega Millions, with just 24 cents returned.
Shifting a culture is exceedingly difficult. The lottery culture that now exists simply has too many winners — namely the organizations that run the lotteries and the states that reap significant revenue from it — to be stopped, or even curtailed.
Yet the full ramification of this culture has yet to reach its crescendo. Until then, jackpots will continue to soar, states will continue to enjoy the revenue generated, and those who can least afford to participate will continue to sink into the mire of destitution that the lottery culture fuels. Such a scenario is unfolding, all accomplished one ticket at a time.
Sheldon H. Jacobson, Ph.D., is a professor of Computer Science at the University of Illinois at Urbana-Champaign. He applies his expertise in data-driven risk-based decision-making to evaluate and inform public policy.
Lottery culture is overtaking America, but for most, it’s a losing bet
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27.03.2024
The Mega Millions lottery jackpot recently topped $1 billion, while the Powerball has reached more than $850 million. Large jackpots have become conversation pieces, fueling a lottery culture that permeates the nation — and influences more people to buy even more tickets.
Recall that the Powerball lottery jackpot hit $1.765 billion on the Oct. 11, 2023, drawing, with a person in California holding the winning ticket. That is 17 followed by 8 zeroes. For nearly everyone, one billion dollars is an unfathomable amount of wealth. Of course, if the winner opts for a lump sum payout of $774 million, they will still end up with around $487 million after federal taxes (California does not tax lottery winnings).
Powerball and Mega Millions effectively operate as national lotteries. They are available in almost every state, providing millions of dollars of revenue to state coffers. Only a handful of states opt not to participate. For example, Alabama, Alaska, Hawaii, Nevada and Utah do not offer Mega Millions tickets.
Lottery tickets sales continue to grow. In 2022, New York state had over $11 billion of lottery ticket sales. To put this into perspective, in 2021-2022, New York state collected just over $18 billion in sales, excise and user taxes.
So where does lottery revenue money........
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