The argument for the state having a monopoly on lotteries is that if there wasn’t a legal lottery illegal lotteries would proliferate. Thus to protect people, the state should run it as it would then be guaranteed to be fair and free of the criminal element (mobsters, etc.). Ideally, the lotto would just take in enough to pay the winners and administrative expenses. However, most states have abused this monopoly and just see it as an alternative source of revenue, which turns it into a regressive tax.
State lotteries should be small, should not be advertised and should not be sources of revenue for the state.
Washington State Lottery has a slogan, "It's good to play!"
It really should be, "Playing the lottery is a pretty terrible idea and we're going to, on average, take your money. If you still want to play, fine, but cheeseburgers really are better than lottery tickets. Wealthy people got wealthy by putting their money into index funds and savings accounts."
> Wealthy people got wealthy by putting their money into index funds and savings accounts.
No they didn't. Not with the implied "as an alternative to lottery tickets".
You could probably find a handful of very well paid and very lottery addicted people constantly blowing up that income. For 99.99[more 9s]% of people, the cost of lottery tickets is not the difference between getting wealthy and not getting wealthy. Even if they buy a bunch every payday.
Did they become wealthy, end of story? Saving up money to be wealthy, without the rest of the context, is reasonably common.
If they either needed to specifically curate their lottery habits to become wealthy, or if they failed to become wealthy because of their lottery habits, then I'm interested. Because that's the part that I'm betting is quite rare. And it's also the part that needs to be pretty common if the message is supposed to work as a lottery-relevant message.
Does your use of “self-made" have any concrete definition?
I looked on the related website and the very first blog entry is about how you can teach your children the skills they identify as leading to wealth.
And yet, it appears that the claim is that, in general, people don't get taught these skills, and some people discover them through sheer grit and determination. Which seems contradictory.
And that's putting aside the weird concept where someone who earns 10 million and spends 9 million on stuff, is ranked as the same as someone who lives a meagre life and dies with 1 million in the bank. I'm not sure that concept translates well into the commonly accepted definition of millionaire.
While this book is getting a little long in the tooth (the title needs to be inflation-adjusted now, I suppose), it's still a fascinating read. The authors considered "self-made" to mean that the subject did not receive monetary support from their ancestors as an adult in the form of trusts, inheritance, or other forms of "economic outpatient care" (their term).
This number is going down with every home inheritance and isn’t stable across generations. It’s largely a function of homes being bought for low values appreciating to over $1 million and not a function of labour markets.
It doesn't sound like you read the book. Before dismissing it, I suggest taking a look at it. It costs $1.38. Not really a big investment in something that could make you wealthy. It's well worth it even if it has only one good idea you can use in it.
Came here to say exactly this. People will play numbers games organized by the mob, so it does make sense to give them an honest game and keep the money from crooks. But the state take should be small. And absolutely no advertising.
I accept that a state monopoly is better than making the mob richer and stronger. However given that it's mostly the poor that play lotteries, bingo, etc and all of them are rigged against the players, the state should find a way to give back most of those money to the players (there are expenses to keep it running.) If a private company is running it for the state, the margin should be small. This is maybe even something a politician could use in a campaign.
Mob, let alone legal casino operators, would never get away with such ridiculous margins. Even organized crime faces competition from unorganized crime, your neighbor's home poker game will probably have a pretty low rake.
When I was a kid sport betting was illegal in Italy, and almost everyone I knew played illegal sport bets.
But we also had legal national Lotto[0], and _illegal_ Lotto betting with about the same margins.
And when sport betting got legalized, the odds given where about the same as the illegal one, until the latter de facto disappeared.
So, I'm not sure the mob would not get away with Lottery margins.
[0] the traditional Italian lotto is a betting game: you bet that 1-5 numbers will come out of an extraction, but it's up to you to choose how risky a bet and how much you bet, e.g. getting one number pays 11:1, 3 numbers gives you a 4500:1 etc
We had Totocalcio too. Btw, I didn't know anybody betting on sport results but I remember the TV talking about that. Interesting bits at https://en.wikipedia.org/wiki/1980_Totonero
I'm still not convinced that some lottery winners aren't preselected. I get it, that it is supposed to be auditable and resistant to cheating but wouldn't be the first time a large gambling system has been found to have issues. It also seems like whenever there is some financial crisis happening that Powerball and Mega Millions always go up and it gets talked about in the news.
Why would the state do that? They are making a killing by playing "fair". Unless you are suggesting literal bribery, I don't see it.
For some people winning the lottery (even smaller prices) is literally the only "realistic" way of getting a moderate amount of "wealth"
When there is an economic crisis, more people are stuck in bad situation and are more susceptible to moderate gambling. News and lotto operators are selling are happy to keep selling this dream
> For some people winning the lottery (even smaller prices) is literally the only "realistic" way of getting a moderate amount of "wealth"
That itself is questionable. Let's say somebody of poor socioeconomic background wins $100,000 in the lottery. Would they suddenly make reasonable financial choices with that money and "make it"? It's possible. But it would require completely changing the mindset that made them play the lottery in the first place. You know, the "It's a gamble and it's risky, but I feel like it's all about God." mindset. Possible. But unlikely, if you ask me.
This is a poor argument in favor of lotteries. It would be more beneficial for people in those areas to have less incentive to burn their money on lottery tickets, and the money that does get burned go to better education and improving conditions for them to climb the social latter and provide more realistic ways for building wealth. Instead of hoping for God's intervention through lottery wins.
Of course it's a poor argument and your arguement points in the right direction (though I don't have enough data to confidently make a statement about peoples ability to manage their finances)
But people like to dream and everybody knows that someone wins the lottery.
But that's partially the point, people's dreams of escaping their situation is used to exploit them. Then the state is funneling the money out of the most poor and desperate, which is out right depravity, to benefit mostly everybody else except who they take from the most.
That's not a fair and equitable system, nor arguably the way states should be managing such lotteries, particularly the profits from them.
Huh? The whole point is to generate revenue. Always was. Shitting down numbers rackets was just a side benefit used to sell the lotteries.
The horse is totally out of the barn on gambling. We’ve decided that it’s all good. I was at an MLB game this weekend and they go through the betting lines for different games in the scoreboard before the game. It’s fully mainstream.
A good example of an illegal lottery would be the Bolita [0] popular in SW Florida. It was all tied up with organized crime. This led to violence when Italian organized crime attempted to wrest control from the Latinos who first implemented it.
In Michigan they sold it by saying all the lottery money would go to education. But other funding to education was cut by the same amount, so technically the lottery is funding education even though the revenue increase went somewhere else.
This is my biggest pet peeve with local tax increases. They always claim the money is going to whatever the public most cares about - education, etc. - but really it's just an overall budget increase, and the amount spent on education doesn't actually increase.
Is it really a tax if it's voluntary? That seems like a contradiction of terms.
And why not ban the lottery entirely if you're not going to use it as a revenue source? Keep it around just to entertain poor people? 99.999% of them will still lose money anyway if it's morality you're worried about. Does it really matter to the winners whether they take home $100mm or $70mm (and the gov the remaining $30mm)?
It doesn't matter for the losers, they're out their money either way.
> Is it really a tax if it's voluntary? That seems like a contradiction of terms.
Um, it's not voluntary. Buying the product is voluntary. But the state taking a cut once you do buy the product is not voluntary. Don't mix those two aspects.
It's voluntary to buy a pound of chicken feet. It's not voluntary to pay VAT on that purchase.
It's voluntary to go to work and earn a salary. It's not voluntary to pay income tax on that salary once you earn it.
> And why not ban the lottery entirely if you're not going to use it as a revenue source? Keep it around just to entertain poor people?
One reason is to keep a legal way to do this, since otherwise illegal ones have higher demand and pop up. It's more expensive (and arguably worse for society) if you make gambling entirely illegal and instead need to go hunt down illegal lotteries with more police resources.
> 99.999% of them will still lose money anyway if it's morality you're worried about. Does it really matter to the winners whether they take home $100mm or $70mm (and the gov the remaining $30mm)?
You clearly don't play the lottery (and I don't mean that negatively). Most wins are small. $400 here, $2000 there. That's how you keep people hooked. And in those orders of magnitude, it makes quite a difference in practice.
It is not a tax in the strict, technical sense, obviously. But in practise it functions much as one.
The comment you're responding to tells you why it shouldn't be banned: because then it will be held by criminals (by definition) instead. And those criminals tend to have ties to less nice forms of crime too. So it's sort of a damage containment strategy, but it could (in the eyes of GP) be executed better.
Is it really true though. Lotto ticks are sold in every small corner store, many gas station convenience stores, and most chain convenience stores, and many grocery stores. If they were illegal, most of those places would stop selling. What percentage of people that currently buy lotto tickets would seek out illegal places to get them? If it's 100% then sure, keep the legal lotto. If it's 5% though, what then?
Is that even true, though? I mean, there are varying levels of lotteries across the states. Five states don't have them. Is there clear evidence of illegal lotteries proliferating in the states with fewer state-run lotteries?
The first step here should start with the belief that the lotteries should just be outlawed, and then actually demonstrate why that won't work.
In GA the lotto funds scholarships. It might be regressive in that the poorest kids may be unable to get the grades necessary to earn HOPE scholarship, but insofar as taking vice that’s going to exist anyway and making it serve a public good, it seems like a pretty fair deal. It might be backward to call it so, but my entire life my dad told me not to play the lotto, that it was an IQ tax.
State-run lotteries are ALWAYS about the transfer of wealth and property from the poor and marginalized to the wealthy and connected. This was true during colonial times, this was the manner by which the state of Georgia divvied up land stolen via Indian removal, culminating in 8 substantial (and all rigged) lotterying of land that can only be characterized as stolen under the threat of muskets and bayonets. It's not a coincidence that lotteries became increasingly unpopular. This was then deliberately conflated with private lotteries ran by blacks, immigrants, and the poor where the house odds were good but not anywhere close - to the tune of 1 in 900 compared to 1 in 14 million or so for your typical 6 out of 49 game, made a moral issue, then a tax issue (giving more reason to raid minority neighborhoods), until the 1970s when essentially states began seeing the system as a two-birds-one-stone scenario both in raising revenue and also booting out what was otherwise an illegible parallel society that it had little direct way to profit from or exercise control over.
The really interesting counter-example - or really, the most incompetent series of lotteries ever ran by a state - was the excise farming schemes the British colonial administrators ran in SE Asia, in particular Penang and Singapore and further afield in Malaya, between the 1840s and officially 1903. Excise farming is basically the lotterying of monopolies on the vice trade for fixed periods of time, which existed since the 1500s and periodically gets brought out (prominently under Cromwell, and a bit during the restoration), except because the decline of the East India Company and the lack of civil servants and administrators who had a working knowledge of Chinese, which had become the biggest financial players and essentially realized that the authorities were unable to make sense of the place-of-ancestral-origin system that had little to do with what the British were familiar with (like blood quantum) and inadvertently enabled the same native-place association or Landsmannschaft (we need an English word for this, btw) to simply dominate certain vice trades by the simplest subterfuge - by leveraging the comparatively fluid role personal names represented. Yes, it took more or less an actual case of "all Asians look alike" for a state lottery to fail. Carl Trocki's works are the authoritative research on this subject and time period for those interested in what probably represents one of the most mind-boggling peacetime self-owns by two successive governments that in mainstream academic discourse (outside Subaltern, Asian, and Diaspora/Migration studies, which are arguably niche and very much interdisciplinary), represents the archetype for hegemonic power relationships in practice. I suppose one can also chalk it up as a lottery win there, a rare one, but someone does usually actually win the lottery eventually.
In California, they give a certain amount to schools, but the state legislature uses lottery projections to justify slashing budgets to the public school system. Kind of thinking this is not how it was envisioned to work.
This is true as is the nature of "food deserts" in the poorer neighbors, at least where I live – there are higher concentrations of convenience stores, drive-thrus, and gas stations that feature items like tobacco products, alcohol, and lottery tickets that similarly exploit the local populations impulse purchases and eat up what little income they earn from two or more low-paying jobs.
It's viciously cyclical and those sin-taxed items all promote bad habits, harm physical, mental, and spiritual health, and perpetuate check-to-check living and discourage savings. It makes sense to me because many folks in these communities rely on public transit and/or walk to where they need to go, so they buy from what's available.
This is the dark side of liberty where we see that people do not always choose the best options from those available to them when impulse buys are offered , or sometimes, there is far less to choose from for certain populations to begin with.
I recognize I'm oversimplifying and probably have committed more than a few gross stereotypical statements, but I am distressed to see the conditions in a lot of these neighbors, not for me, but because of what I imagine it must be like for a lot of folks who don't have the same opportunities to rise up simply due to the circumstances of their birth.
There is absolutely no good in the lottery and it should be abolished. Any alleged good for education or other programs is more than countered by the harm it does to the lower income populations. Education should be paid for from taxes, and just raise taxes if necessary. My guess is that the money that comes from lotteries don't usually end-up benefiting that much.
Honestly its so much wasted human capacity. Its not even the case that we don’t have enough: there’s enough food to adequately feed everyone. Its a logistical problem and when markets are left to their own they will obviously lead to situations where only the cheapest products win out (not the most nutritious).
> lead to situations where only the cheapest products win out (not the most nutritious).
Vending machine owners stock what sells. People vote with their dollars and their attention. We are free to choose what we eat, and free to throw out the TV. Most enjoy watching the 'breaking news' propaganda rather than putting in some effort to cook a simple meal at home. Your body, your choice.
Meanwhile nobody pitches a fit that literally every single business is a centrally managed and top down entity, and it seems to do quite well for a lot of them.
Socialism is when workers control the means of production. That's not really the case in this example. Top down also doesn't mean government control. Corporations are driven top down, from a CEO down to the subordinates at each layer. Given a defining goal, they can be very efficient. If each subordinate was supposed to figure out what to do, it's not very efficient or effective.
Sounds good to me, as long as it creates positive effects. There is nothing wrong with banning sugar laden foods if we know they will cause obesity, for example.
I'm trying to understand why we would have a view other than neutral when it comes to whether people have the ability to spend their own money on impulse items or otherwise.
I'm curious, the article talks about the issue where a small number of, essentially, addicts, are responsible for a huge portion of total sales (10% of players are responsible for 2/3 of total revenue). I find this interesting because this pattern repeats in a number of different "potentially addictive" pursuits, where the pursuit can be a pleasant and welcome diversion when done in moderation, but is ruinous for addicts.
For example, I love having a good glass of wine or two a couple times a week at dinner. But the alcohol industry would essentially collapse without alcoholics - a study in the UK found that 77% of alcohol was sold to problem drinkers - 30% to "harmful" drinkers (women who drink more that 36 and men more than 51 drinks a week) and 48% to "hazardous" drinkers (women 15-35 drinks a week and men 15-50 drinks a week). Similarly, I like blowing 5 bucks on the lottery whenever there is a huge jackpot (I can afford it and am basically just paying to fantasize about what I'd do with a couple hundred million), but apparently folks like me make up a relatively small proportion of lottery sales.
So, I'm basically just wondering there is anything that can, or should, be done here. I'm assuming these distributions are what you'd always see in something that shows a power law distribution - the huge percentage of total sales is always from those with addictions because they indulge so much in the first place (related very interesting article: https://astralcodexten.substack.com/p/drug-users-use-a-lot-o...).
Consider where lotteries come from - everyone in the room puts their name in the hat and then one winner is drawn (or maybe also a 2nd prize and 3rd prize). But it's simple - 1 person, 1 chance.
You just can't buy more in that system. So the 'problem gambler' that blows most of their paycheck on lottery tickets just isn't even possible.
Maybe the limit doesn't need to be strictly 1, but even just having a limit, low enough to not be too much of a hardship even to a poverty-level person, would still be a simple solution.
People sure wouldn't like it though.
They'd immediately start working on ways to get around that limit. Same as they would if you limited them to only buying 1 6-pack of beer per week.
"Sin taxes" on self destructive behavior and officially run regulated versions of things which are infeasible to reasonably ban (and the black market "cure" would be worse then the disease) can often be reasonably justified. But every single last one of them should always be completely revenue neutral. All money should be divided amongst the state's residents and sent right back without exception. There's clearly been a long standing temptation to give into the argument of "we'll use this money to make up for the negative effects" but in practice anything that feeds into the general fund directly or indirectly creates perverse incentives that are just too dangerous. Government should take no direct financial interest in whether money from sin rises or falls to zero. That's a big missing piece in a lot of these systems, and the risk of dependence seems similar to that of fines which are often effectively "sin taxes" too. There a number of examples of places [0] which came to depend on fines as a significant source of revenue to run government and in turn took actions to increase the take to great destructive effect.
Being raised in what I believe to be one of these communities this feels very true. In Pennsylvania this supposedly supports seniors, but seniors often are the ones gambling. The most frequent shops for selling lottery tickets are also tobacco stores. I find it hard to resist a scratch off from time to time myself.
I don’t know what the solution is, I know it gives people hope and excitement. Even if they think it’s impossible to work themselves out of debt they hope they’ll “win big” one day keeps them going to an extent. It’s really just another version of the “Marshmallow Question” just with adults instead of kids. You could write it all down for them and spell it out, but to them the math wouldn’t work out.
> I find it hard to resist a scratch off from time to time myself.
As long as you aren't doing it to win but instead to enjoy yourself gambling, and you do it with disposable income, this is fine. Don't beat yourself up for enjoying something mathematically suboptimal.
> Even if they think it’s impossible to work themselves out of debt they hope they’ll “win big” one day keeps them going to an extent. It’s really just another version of the “Marshmallow Question”
On the contrary. With the Marshmallow Question, you know you'll be rewarded. In this situation you do not think you will be rewarded. If the Marshmallow Question was "do you want this Marshmallow, or do you want it thrown away", that would be a better example. At least, in the mind of the players
> but to them the math wouldn’t work out.
It's entirely possible the math doesn't work out. A negative EV is significant if we are playing a game where the purpose is to increase my bank balance, but it's entirely possible that for various reasons that doesn't apply IRL.
> What exactly is there to enjoy about a scratch ticket beyond the hope of winning?
There's "buying it for the adrenaline rush of possibly winning, and scratching it hoping to win" and "buying it because you're due/you feel lucky/you really need the money".
As long as you are buying the thrill of the chase and the occasional great feeling of winning, you're fine. It's an experience and comes out of that mental budget. If you're buying it because you really want or believe that $500 from the scratcher is coming to buy your baby new shoes, it's an issue.
I hope that makes some sense. Basically, do you understand your EV is negative/realistic odds of winning are negligible but are buying it anyway?
No. It's more like "Do you want one single marshmallow, which might bring you a few brief seconds of pleasure - in the unlikely chance that the dog doesn't eat it first or it doesn't get covered in ants first? Or would you rather have a one in a million chance of having as many marshmallows as you want, whenever you want, for the rest of your life, with no more worries about the dogs or ants because there'd be plenty for the dog and you would never have ants anymore?"
Except the odds are never NEARLY as good as one in a million, and humans have a well documented inability to fairly judge odds and understand large numbers.
Would the lottery be nearly as exciting for people if they had a genuine understanding for the statistics involved? I don't mean that they've seen the math, but that you can feel in your gut just how impossible it is to "win" the lottery
Georgia's lottery[1] is overall a pretty decent system, all things considered.
> the lottery takes in over US$1 billion yearly. By law, half of the money goes to prizes, one-third to education, and the remainder to operating and marketing the lottery
It pours massive amounts of money into Georgia's education system. It's not perfect but it has put hundreds of thousands of students through school. If we must transfer wealth out of needy communities I can thing of worse places to put it than into education.
Money is fungible. In the state where I grew up, when the lottery was proposed, it was promised that the money would go to "education." Within a few years, the education budget remained neutral, as the contribution from the general fund was reduced by roughly the same amount as the lottery contributed.
Generally when lotteries "fund education", it can enable legislatures to allocate tax money that had previously gone to education to other priorities. This shift can turn lotteries into a de facto tax on being bad at math.
> This shift can turn lotteries into a de facto tax on being bad at math.
Would lotteries be ok if the expected value of the players prize equaled the price of the ticket? Being bad at math and lotteries being a regressive tax seem orthogonal.
You have to buy the machines, receipt rolls, maintenance, pay people to run it, etc. The only way to have a sustainable non-negative expected value would be to pay expenses out of taxes.
I'd expect that many tax payers would prefer their money to go to other places than for gamblers to have better odds.
On average, yeah, I think so. It would then be a way to say that money has non-linear utility, which is probably true. An aggregated million dollars probably does have more utility than a million single dollars.
Such an institution would be difficult to administer with zero operating costs, though.
> An aggregated million dollars probably does have more utility than a million single dollars.
no, it's the exact opposite, there is a declining marginal utility to money. Think of it this way, homeless person gets a dollar, that's some food for the day. A second dollar is better, but it's not as valuable as that first dollar, but the second dollar is worth more than a third dollar; all the way up to Bill Gates, how much does he care about a dollar?
It's an important concept because it underlies attitudes about and mathematics of risk: even in a fair lottery, the pain of losing money is greater than the thrill of winning some, as an aggregate across the population. It's fundamental to the stock market, and the insurance industries, which exist because of the asymmetry of up vs down, but operate on the aggregating of millions of single dollars.
btw, I'm not meaning this casually, people won Nobel prizes for figuring this stuff out
What’s the utility of being in a different economic class? There is more to money than just spending it and I’d argue there are large utility gains from crossing class boundaries. The academic models ignore any utility except spending and don’t even adequately account for things like more expensive high-quality goods being cheaper in the long run. So I don’t find this utility argument that proven or convincing.
if the marginal utility of wealth declines for an individual, it declines for a population. you have to show that these things add, but it has been.
in ye olden times there may have been strict class distinctions based on birth etc., but the notion of class you are using is hazy and undefined but basically is based on wealth, which does not slot neatly into categories but is continuous and differentiable and is a standard population density function, depending how you look, gaussian or pareto, etc.
you just accounted for higher quality goods being cheaper in the long run in your head and you make that assessment when you purchase, so why do you think markets or models of markets can't handle that or that the people who study them haven't thought of it? they have.
you being unimpressed with the argument is like me being unimpressed by what my doctor says. what are the odds he knows more about it than me, where "me" and "he" are extended across the population and all doctors?
In theory, poverty traps can lead to increasing marginal utility of wealth, and make it quite rational to e.g. gamble on a lottery. However, the notion of a poverty trap is not very popular these days. The concept only ever had traction wrt. people in extreme poverty, and even for those it has now been shown that small increases in income are hugely beneficial. There's no need for what used to be called a "big push" to pull people out of the trap.
Poverty traps are still very real and exist in most welfare systems. Small increases have to be targeted to not push someone over a clawback boundary in order to be beneficial. If you give someone $100 and they lose their subsidized housing as a result that’s still a poverty trap.
You don't have to transfer anything, though - just get rid of the marketing, take a couple percent to cover administrative expenses, and spend the rest on payouts. If you need money for education, tax people in a fairer way.
> If you need money for education, tax people in a fairer way.
I don't think anyone is compelled to gamble by the Georgia Department of Revenue. This is essentially Georgia saying, "We know we can't stop you from engaging in this vice, so we're at least going to make it beneficial to society in some way." Colorado and a number of other states are doing the same thing with cannabis revenue.
I personally hate gambling, I understand how people get addicted to it, but like illegal drugs it's just a thing that the government can't possibly control. The next least bad thing to do is harness it for good in some fashion.
There is no reason to advertise and promote it. I wouldn't want the government giving out free samples of heroin because you can't stop people from vice.
I can see some merit in advertising it, strictly to drive gambling activity to the above-board option. There are plenty of underground gambling rings, the more people are aware of and use the legitimate option the less underground gambling will thrive.
That seems overly negative, to me. Being 26th makes them average, and they get to use the money that other states use for education on other things, or lower taxes.
Georgia isn't heavily subsidized (unlike most states in the region), they actually rank 36th in federal dependency[1]. Maine, Connecticut, Pennsylvania, and Rhode Island all rank higher on federal dependency.
There's an interesting theory that the solution to this is to subsidize the lottery and improve the odds significantly. Take to the extreme and you could essentially implement UBI this way.
I also don't think poor people are wrong to think a chance of getting a life-changing amount of money is a worthwhile luxury spend compared to the other available options. They may be wrong about the probability, but instead of fixing that with education, we could fix it by making the probability closer to people's intuition.
Given the well-known issues with means testing, randomly assigning the payouts instead might be a significant improvement.
But it’s also possible that math whizzes like Jerry Selbee are finding and exploiting flaws that lottery officials haven’t noticed yet. In 2011, Harper’s wrote about “The Luckiest Woman on Earth,” Joan Ginther, who has won multimillion-dollar jackpots in the Texas lottery four times. Her professional background as a PhD statistician raised suspicions that Ginther had discovered an anomaly in Texas’ system. In a similar vein, a Stanford- and MIT-trained statistician named Mohan Srivastava proved in 2003 that he could predict patterns in certain kinds of scratch-off tickets in Canada, guessing the correct numbers around 90 percent of the time. Srivastava alerted authorities as soon as he found the flaw. If he could have exploited it, he later explained to a reporter at Wired, he would have, but he had calculated that it wasn’t worth his time. It would take too many hours to buy the tickets in bulk, count the winners, redeem them for prizes, file the tax forms. He already had a full-time job.
You seem to be also missing the point of these lottery retailers being disproportionately clustered in the poor Black neighborhoods. The "math problem" also involves pushing the distribution of the "vice" off on them (where such people are more desperate to escape their circumstances), then negating any overall or possible benefit to those poor Blacks that don't have such a vice (like kids) and need greater educational funding and opportunities.
Gambling is a vice and pretending that it's not doesn't help people. You do receive utility from buying a single lottery ticket, because it allows you to dream, but that's not something that scales with increased spending. Beyond that, it is never a rational decision to buy lottery tickets. You're almost always going to be happier if you put that money aside in an emergency fund. In the past, you'd be able to use the excuse of poor people being underbanked, but these days there are plenty of fee-free online banks.
You are misunderstanding the point that I made. I'm not saying that gambling isn't a vice nor am I condoning such behavior, put rather the state allowing or pushing such a vice disproportionally into poor Black neighborhoods is a demonstration of being corrupt and exploitative. Selling nearly unachievable "dreams" to poor desperate people is depravity, even more so when the state is sanctioning the marketing and advertising campaigns being directed at them.
The view of such a situation is further demonstrated by the state minimizing any possible benefits from the profits of the lotteries to the same Black poor neighborhoods they are taking advantage of. They are primarily funneling money out of those neighborhoods, from the people that can least afford it, to any and everywhere else.
I disagree on minimal evidence. My intuition is it's more likely you're wrong about what people value than that many people are wrong about that kind of math.
Arbitrage is a real issue, but it's not magic and there's a lot of friction in the real world. For ex, you don't get spam callers trying to buy your chance of a large settlement payout.
I think there is an inherent tension between the two ideas in that a lottery is, fundamentally, one profiting at the expense of (a consenting) many, while UBI guarantees a baseline state for many without particularly disadvantaging any one.
Some might consider UBI an implementation of John Rawls' Difference principle [0], that distributive inequalities should work to the advantage of the worst-off. Lotteries would support utilitarians' counterargument that one may very well prefer to roll the dice on his or her welfare, rather than accept a guaranteed, minimally satisfactory baseline.
Yes. Let's make a lottery based economy. That would boost the productivity and make the nation prosperous. This is like fixing a pothole by creating a supermassive black hole.
Okay, just replace our existing failed welfare system with this then. You don't think there's massive suppressed innovation because so few people can try a startup?
How is the lottery like UBI? This is similar to crypto maxis gambling on shitcoins and saying “generational wealth opportunity”.
Both of these are the siphoning of money from large volumes of people to a few people, who are the “success stories” used to dupe the next set of people.
I'm saying it's about the specific values of the parameters. Right now they're set so it's an evil trap. But we could maybe just tweak the parameters so that wasn't the case.
If the evil of the lottery is that the expected value is lower than the ticket cost that's just a simple stats problem to fix.
As one fair way of allocating insufficient resources. The lottery is evidence a lot of poor people would rather have a chance at radically improving their life than a small amount of money.
Do you have any real evidence that poor people would prefer a 1/300M chance in winning the lottery versus a guaranteed paycheck for their monthly expenses? I would love to see the proof for your assertion.
No, that sounds highly implausible to me. A guaranteed paycheck of $1,000/month to every American (in current USD) would be way better than what I suggested. This idea presumes scarcer resources.
I'm talking about something more like the difference between a 1/10 chance of $1,000/month for a year with a new drawing in a year vs $100/month for a year every year.
Even with those odds, I still don’t believe any poor person would prefer a lottery over guaranteed income. Your scenarios sound like projection/speculation than realistic to me.
I am very skeptic of this theory as a lot winners of lottery’s end up in enormous debt after few years due to horrible mismanagement of their funds. Why take this odd route and not just directly implement UBI if that is the goal?
That's a serious issue, but I think it's mostly caused by the long-term impact of poverty both socially and neurologically. If you grow up worrying about money you often learn instincts that screw you over if you luck out.
My uninformed guess underlying this is that making the payouts smaller and more frequent would solve this. First off, people would grow up in better communities. Second, I think if the payout wasn't advertised as "retire for life and be a rich person" people would face less social pressure to shower friends and family in gifts.
I think given no constraints giving everyone $1,000/month is best, but I think there's a fair argument giving 1/1000 people $1000/month (and alternating) is better than giving everyone $100/month.
The "where are they now" stories have been getting more positive over the years. It seems like more of the winners are middle to upper middle class and also awareness of the curse of past lottery winners has made winners more aware that they need a plan so they don't end up penniless a few years down the road.
I really like this idea(not for UBI, but for a better lottery that more evenly distributes winnings), couple it with X amount of free tickets per week/month for low income earners too!
Changing the lottery into a similiar model compared to Spain where there is one big price pool and thousands of winners winning smaller amounts might go a long way.
There's a simple answer: Offer a lottery with a high payout rate and flatten jackpots to the extent they don't cause a shift into other worse sorts of gambling. The total amount of money transferred to support government programs makes up less than 0.5% of total government revenue; it's trivially replaceable.
If we assume the main problem with lotteries is that they make some people poorer, we need to solve two things: The payout being less than the cost due to both high overhead and transfers and the payouts tending to concentrate wealth since even in a lifetime of play few win the largest jackpots.
One can't make them too flat because consumers like large jackpots which is why they've grown over time and become harder to win. Presumably there's a level below which consumers would switch to other types of gambling regardless of legality.
I assume that would reduce lottery proceeds significantly so is a nonstarter. I know the numbers, but I'm not so sure it's always illogical (in a human/emotional sense) and you get quite a bit if middle class people playing when the payouts are significant. YOLO
Sounds like NS&I 'premium bonds' in the UK. Expected rate of return is 1.4% (I think, something like that anyway) but it's paid as prizes monthly ranging from £25 to £1M - or no prize.
Increasing payouts should bring more players though it would be offset by eliminating the advertising that currently consumes some of that revenue. Flattening jackpots would have a negative effect but we just need to optimize for being above the point at which there's competition instead of maximizing lottery revenue.
It’s honestly shocking how many facets of American culture are predicated on addiction for profit. Alcohol, food, social media, gaming, opioids, cannabis, nicotine, gambling. It is extraordinarily difficult to find a sense of perspective independent of the influence of these industries.
It's pretty amazing how the states are in the business of:
booze, tobacco, weed, gambling and gas
Imagine what the total revenue from just those 5 things is? It's got to be like printing cash and yet in most states and cities across the US have crumbling infrastructure, failing schools, underfunded pensions and budget deficits. This is in addition to all their other more regular tax regimes. Where does the money go?
It's not as much as you'd think. For Illinois, lottery alone nets something like $3 billion, of which ~$700-750 million goes to funding public schools. Public schools expenditures are ~$35 Billion/year. So, less than 1/35th of costs. Add in the alcohol, tobacco, weed, gambling taxes, and you still not even close to covering half the state's school expenditures.
Granted, Illinois is perhaps the most fiscally screwed state, so might not be best example...
>"Public schools expenditures are ~$35 Billion/year."
That all appears way off.
"This year, the governor plans to increase the state’s education general fund by $498.1 million — a 5.4% increase — for an overall budget of $9.7 billion."[1]
Additionally the Illinois state gas tax which is the second highest in the US is 40 cents a gallon.[2][3]
That was just Pritzker's proposal for the state's portion of the elementary and secondary education general fund. There are other funds to account for, as well as the federal's contribution which are past proposal and have been enacted. Better source is to grab straight from Illinois.gov's site [1].
Look at: Fiscal Year 2022 Budget, Table I-A Operating and Capital (xls) - Cell J373 + Cell J438.
Total Elementary And Secondary Education = $27.7B.
Total Higher education = $4.7B.
It's true of gambling in general. A case study is the state of New South Wales in Australia: the state with the most poker (slot) machines per capita [1], in the country with he most poker machines per capita [2] (excluding gambling specific destinations such as Macau and Monaco). One poker machine in NSW for every 82 people, with an average loss of AU$1000 per adult per year. The losses (called profit for the hotels and clubs) are heavily skewed toward lower income local government areas [3]: a loss of about $AU2500 per adult per year. Considering that not everyone gambles the losses are even bigger for those who do gamble.
Granted an unknown amount of these losses are "business costs" for money launderers [4], but the damage to the community is still there from the associated crime.
The "You Can't Ask That" episode on gambling in Australia was a massive eye-opener for me. They interview a bunch of people who are lifetime gambling addicts. Its shocking how badly its ruined their lives.
I have no idea how many people who gamble regularly have a problem with it; but I'd support banning gambling entirely.
For my brother's bachelor party, I went to a casino for basically the first time. We were there from quite early in the afternoon and it's absurd the clientele that can be considered "regulars". As my brother darkly called it: "You have to be careful, otherwise you will lose your trailer". Meanwhile at least one old man spent several hours assuring us of his "system" to "beat the odds" while he lost hundreds of dollars, never once showing even the slightest understanding of what "the house always wins" means. Indeed, the rules for play for the card games were artificially more complicated than they could be, in my opinion this was done in order to more confuse players and make them think they found a "hole" in the rules to "beat the system"
Too many people, especially here, espouse the "but gambling is entertainment" line. I don't buy it. I've spent thousands on video games, and sitting in front of a slot machine built by "Konami", a literal video game publisher, and it was abysmal from an entertainment aspect. Nobody would pay to play these games if there wasn't some internal pretending that "I can beat the system"
If this was possible, that would be great. But you cannot eliminate a service where there is sufficient demand. You can only drive them underground, which frequently cause worse externalities for society than the original things being banned (drugs, prohibition-era alcohol ban, prostitution).
Exactly. It's not a situation of well off people going somewhere to spend extra cash, as it is exploiting desperate people hoping to find some miracle to escape their circumstances, by shoving a negative vice in front of them.
Then maybe you don't follow under the demographic of "needy"
My mother also spends $2 on them. Sometimes a couple times a day. She also compulsively gambles and has endangered my life before trying to satiate the urge.
I also grew up absolutely dirt poor, she was homeless half the time, but two unwavering constants in her life have been cigarettes and gambling, and they are far from unrelated when speaking of industry motivations. These industries have ruined my relationship with my mother, severely impacted my own quality of life as a knock-on effect, and I'm far from the only one.
Keep buying the tickets. But you can't justify the state of the industry today because you're not the one caught in its net.
Sorry that sucks. I'm intimately aware of addiction and how it can sadly smash families and people from all backgrounds and economic situations, so I'm empathetic to that problem.
And I'm for sure not disadvantaged myself.
I didn't know where to comment a reply this seemed most relevant.
I guess what I'm trying to get at is a lot of the threads here, to me, read as elitist & missing the full picture.
E.g. for instance missing the value of entertainment.
even on an unkind view of looking at players only as addicts, like lots of drugs (legal and not), that dopamine hit is fun...
to be clear I'm not trying to put that negative frame into all the people's intention here, just trying to explain how I read a chunk of the comments
It's not only some uneducated non-optimal financial ROI calculation made by disadvantaged people, or compulsive gamblers, who are being taken advantage of by state sponsored casinos imho
I will agree that I cannot understand people who do not at least themselves understand the entertainment value from gambling.
I enjoy gambling, I play poker and blackjack. You can consistently be the best player at the table in poker, but blackjack is an obvious scam.
I never show up expecting to win, I don't derive entertainment from imagining I won, I derive entertainment from the competitive experience of the game itself, elevated by stakes.
I also healthily limit myself to gambling only once in a very blue moon. But that's because my motivations are different, and not driven by desperation.
We aren't the ones who need protecting. It's the desperate who are not in a position to make rational decisions and self-regulate.
>E.g. for instance missing the value of entertainment.
There are hundreds of different ways to get entertainment. Humanity will not be worse off if gambling is entirely banned. How much "entertainment value" does daydreaming from a lottery ticket really bring? Why should those addicts be subjected to the misery they experience dealing with their addiction just so you can pretend to win the lottery in your head? You could just as easily spend your time pretending that you find a giant, valuable diamond in the dirt.
Not at all surprised that these state lotteries in America are taking advantage of poor Black people. It's just another demonstration of how various exploitative systems are put in place for such purposes, like the school-to-prison pipeline, then the pretense by the creators or those profiting from it that they don't know or understand what is going on.
It is also "funny" how after generating so much money from those poor Black neighborhoods, how little the percentage of that money ever goes back to them. The states involved could very much legislate that a percentage of profits (and at what percentages) have to be shown benefiting the poor neighborhoods they are exploiting. But, we all know such problems will not be fixed (despite being exposed by the media), unless forced to and they will be fighting against it at every step.
There are plenty of people who get sucked into spending more than they can afford on the lottery, to be sure. For most people, it's cheap entertainment. They know they won't win, they understand the odds. They're not idiots or suckers. They're buying a cheap thrill. For a few bucks a week, they get some anticipation and fantasy. The big jackpot tickets are great. For $2 you get a harmless thrill, and you can have those fantasy what-if conversations. Scratchoffs are fun to do, and they offer a ton of small payouts. Everyone always mocks lottery players and assumes they're being duped, but most of them are just buying the only thrill they can afford. Beats crypto.
This really needed an investigation? Collecting money is the whole point and state monopoly ensures much bigger margins than casinos. The only good part is that's it's avoidable voluntary taxation.
Question is, before states implemented legalized lotteries, where did people spend this money? Bookies, horses, craps, betting pools at work, smokey card houses, gambling parlors?
Do we make all this illegal, put alcohol, tobacco, prostitution, pro sports and weed into that bucket too. All unnecessary and transfer wealth.
On the other hand, yeah, I'm not sure the argument by the state that hey, it's vice, we'll regulate it and hand the profits over to schools (etc.) is an honest one. Often they dip into the fund for unrelated things.
But all those things take time and effort to access; the lottery is literally available at every gas station in the nation, and most grocery stores, etc.
1. Lotteries are not taxes because the participation is voluntary (unlike the soviet lottery/got's bond combo).
2. People buy lottery tickets just like they buy movie tickets - it is a form of _entertainment_. They heard many times that they should not expect to win - just like they heard many times that what they see on the silver screen is not real. Nevertheless they keep dreaming.
Lottery is a tax on people who don't understand probabilities and those who need something to hope for. Basically it taxes the poor. It makes many of these already poor people poorer and a very few richer. This has been known for decades or more. The results of the investigation are consistent and no surprise.
Because poverty strips any aspiration for the future because you become hopeless. Little pleasures like a cigarette or dream of winning make you feel good for a short period.
Not OP, I'd say the answer is lottery spend is less irrational than you think. A dream you know deep down will never happen might be more satisfying than a candy bar. So I think the solution is to subsidize and tweak the parameters: https://news.ycombinator.com/item?id=32065211
State lotteries should be small, should not be advertised and should not be sources of revenue for the state.