"Out of each $2 ticket, roughly 35 cents goes to non-jackpot prizes, about 75 cents goes to fund the jackpot, and the remaining 90 cents goes to the government."
This is ridiculous. First, it's untrue. Ask Dre or Jay-Z. More importantly, since when is "transformative wealth" hundreds of millions of dollars? If you grew up truly poor and uneducated, making a steady $80,000 a year -- decent house, raise a family, put a little away -- is a transformation.
The odds of ending up like Dr. Dre or Jay-Z are worse than the lottery and require even more significant time and monetary commitment. You’re better off going with your latter suggestion of trying to make a decent living which has pretty good odds.
ehh, going from poor to successful is hard and unlikely, but it’s a lot more likely than winning the lottery.
Maybe your best shot at becoming a billionaire is indeed winning some jackpot. But if you’re looking for anywhere from moderate wealth to millions, you’re much better off trying to find a job and start a business.
Neither am I poor, unconnected or uneducated, but I play the lottery once or twice a year since I enjoy the prospect of ridicules "transformative wealth".
So I buy my tickets as long as possible before the draw, get to fantasise about what if and have a couple of weeks of happy, crazy dreams.
To me that is worth the 10 or so bucks, no matter the odds being so badly stack against me, I guess that is so for many people (who are not addicted to gambling).
The lottery is a voluntary highly regressive tax. Poor people disproportionately play the lottery and are therefore disproportionately funding the lottery taxes.
This is a weird take, very HN/Reddit. At best it misses the point, and at worst it insults the poor.
Its not a "tax" - it's just fun. The odds are terrible, but the dream / "what if?" aspect of it is fun. Theres no downside to playing (Who doesn't have a dollar or two? even when I was broke and lived in my car, I had a spare buck here and there), but the potential upside is limitless.
Eh, I know more than a few people who, over decades, spent small fortunes on these lotteries. $10/month over multiple decades really adds up, especially when you’re already poor.
I’m not saying I agree with the “it’s a tax” position, but I definitely don’t agree with the “it’s just fun” position. It’s an industry that preys on poor people’s poor (monetary) decision making skills.
Tangentially related: My younger brother works the counter at a gas station and the amount of money people drop on cigarettes and vape pods is mind boggling. He tells me $300 a month is not uncommon. A car payment.
Does it prey? I think scratchers / casinos / sports betting / online poker / more general kinds of gambling is far more addictive and malicious, because the dopamine fueled reward->attempt cycle is a far tighter loop with those.
The counter argument is that a lot of those games reward “skill”. Through study/statistics your odds improve, in the same way that equity research can lead to a good stock pick. The lottery is naked chance.
Netflix is capped at $14/month. One may "lose" time or attention or gain many different emotional experiences they didn't want, yet I think their monetary spending is quite capped with Netflix compared to the lottery and other pay more to get more games.
By the quoted numbers the lottery is literally 45% tax.
You seem to be arguing that it's a fun fantasy, so what's the harm in playing? That misses the point completely. My comment is not that the lottery is bad or should not be played but that it is a regressive tax. We could eliminate or greatly reduce the tax and double the number of winners.
I don't think the government should be funded by taking money from the poor. What's the tax on golf resorts or yacht rentals or things that rich people do for fun? Is it 45% of revenue?
Maybe it's a very HN/reddit take to be suspicious of regressive taxes, but I think it's basically status quo bias to reason that the 45% revenue tax on poor people's recreation is fine because that's the way it is - or whatever reason you think this is fine.
What you seem to be missing is that it's only a tax on voluntary participation. Like smoking, gambling, purchasing anybotger form of entertainment. It's not a regressive tax in the way you're portraying it but rather a consumption tax.
Sure, the poor are more likely to play but I think your argument is on more solid ground if you flip it and suggest the lotteries shouldn't be taxed. At least not like they are. The problem after all is not that people play lotteries but that so much of it is taken in taxes.
And yet the poor are the ones overwhelmingly playing the lottery. When you're making six figures you don't really need to win a lottery to be happy and have your needs met, compared to someone living paycheck-to-paycheck. You're also less likely to play if you have enough education to realize it's a bad use of your money.
As with anything, you can look at decisions on an individual level or a systemic level, but the system itself (like the hollowing out of the middle class) encourages certain types of behavior.
It’s voluntary so obviously not a tax. But two things are true: First, for one reason or another poor people tend to play the lottery significantly more than people get are financially stable. Second, the lottery funds the government.
So looking purely at the macro level, the net effect looks a lot like a regressive tax. Which is why people say that even if it’s not 100% true.
Not 100% true? Not even slightly true. People have convinced themselves that only the "poor" play the lottery but that is patently false.
Yes it is a tax on a voluntary transaction but those are taxed already. I think the problem is less that people play the lottery than that the lottery is taxed so heavily to begin with.
Now in the way of Lottery men do also tax themselves in the general, though out of hopes of Advantage in particular: A Lottery therefore is properly a Tax upon unfortunate self-conceited fools; men that have good opinion of their own luckiness, or that have believed some Fortune-teller or Astrologer, who had promised them great success about the time and place of the Lottery, lying Southwest perhaps from the place where the destiny was read.
> Its not a "tax" - it's just fun. The odds are terrible, but the dream / "what if?" aspect of it is fun.
Terrible is an understatement. With those odds, you would have better success to throw $10K on DOGE than to buy $10K worth of lottery tickets.
The main difference being you can hold your DOGE coins vs wasting all your money on tickets valid for a week and to find out that all of them don't match the jackpot numbers.
Yes, that’s why I said attributed to, rather than “Voltaire said”. A quick search seems to point to various economists and commentators in the 18th century.
What difference does that make? The number of people who put large amounts of their income into it are the exception rather than the rule.
Some people drink more than a 'casual' amount. These people also end up paying more in taxes because of it. Does that make you want to take that away too?
The lottery is a way for the government to take over the numbers racket, which formerly was a source of revenue for organized crime. It is a net benefit to society for that reason.
So by that logic, the government could benefit society by selling credit card numbers and fake identities, by executing ransomware attacks, creating open marketplaces for military weapons, and creating a GitHub for espionage documents.
You clearly don't realize how fluid "law and order" is. Numbers was an illegal activity, until state governments realized it was enormously profitable, decided to run it themselves, and voila! Now it's legal. Selling cannabis could land you in prison for a long time, just a few years ago, now it is sold legally by companies listed on NASDAQ. Further, tons of actions and activities have "selective prosecution" and now, openly, we have "sanctuary cities" where governments actually welcome people who have engaged in illegal activities (not making a moral judgment, but there would be no need for "sanctuary" if they hadn't broken any laws) and shield them from prosecution.
Oh heck yes! Low-cost government pen testing! The gov already does weapons deals to catch criminals, probably leaks other countries' secrets on the interwebs, so it sounds like you're on the right track!
The "not openly" is key, though. The OP's point was that suppressing the funding of organized crime was the "net benefit to society". The activities you mention, because they are done in secret, do not provide an outlet to reduce organized crime by establishing legal marketplaces. In fact, you could argue that by engaging in smuggling, arms trading, etc, that the government is increasing organized crime... every time the US sells, some criminal is buying.
the mafia had competition though, so probably offered better odds. In Vegas, even under the mafia, the house edge was small...way smaller than the lotto.
Pennsylvania has a state monopoly on retail liquor sales. Liquor is at least as bad as most illegal drugs.
That is probably better than the approach of some states which make obtaining licenses to sell alcohol or marijuana expensive. In most cases they are capriciously controlled by politicians and bureaucrats, involving prohibitive fees and outright bribery. At least PA's approach is more equal in effect.
> The lottery is a voluntary highly regressive tax. Poor people disproportionately play the lottery and are therefore disproportionately funding the lottery taxes.
If you are a regular non-connected, non-Ivy League folk, your odds of becoming a billionaire via day zero equity appreciation are roughly the same as becoming one via playing the lottery.
And yet this website is full of people deluding themselves that they can become one, and also cheering on other people posting their billion dollar delusions. It's always a real pain to watch the contempt that people who are doing well for themselves have for people who live in inner cities, while engaging in the same behavior, only from a relatively higher vantage point.
It's not even necessary to go all the way up to 1 billion, 100m net worth odds for a regular non-connected, non-Ivy League folk are also kinda the same playing lottery vs. day zero equity appreciation.
The crossover is somewhere below 100 million dollars, maybe even less than 10 million dollars or there about
This comment is sarcasm, right? Perhaps becoming a billionaire is out of reach, but growing your portfolio by 5-20% annually is highly likely, as opposed to -100% growth via lottery tickets.
> This comment is sarcasm, right? Perhaps becoming a billionaire is out of reach, but growing your portfolio by 5-20% annually is highly likely
This is incredibly out of touch.
The GP comment was talking about the kind of people who don't even own stocks and probably can't afford to buy even a single share, because it would eat into their budget much more than a $2-5 lottery ticket.
Also, lottery ticket EV isn't -100%, it's anywhere between -50% and -80%.
The stock portfolio growth numbers are also wrong for long-term, but we'll let that one slide.
> The GP comment was talking about the kind of people who don't even own stocks and probably can't afford to buy even a single share, because it would eat into their budget much more than a $2-5 lottery ticket.
People who buy a $5 lottery ticket every day could absolutely afford to buy stocks if they'd stop doing that.
> Also, lottery ticket EV isn't -100%, it's anywhere between -50% and -80%.
Even assuming your optimistic number, it's idiotic to "invest" anything into something with an expected return of -50%.
No, the GP comment specifically said regular non-connected, non-Ivy League folk. That's an enormously wide net.
In any case, $5 lottery ticket x 2 draws/week x 52 weeks/year = $520. You can buy some stock with that. And plenty of people (unfortunately, mostly poor people) spend a lot more than $5 per draw.
Which government? Is it split between all participating states? Or just the state the ticket was bought in? The multi-state lotteries - unsure how that works.
The odds on this draw were much better. Earlier stories said they expected to sell $400M in tickets, so they paid out about 3X as much as they took in.
If you bought tickets to every draw the expected value of a ticket is $1.10/$2, but if you only bought for this draw the expected value was much better. The expected value before the draw was not 3:1, only slightly above unity because the biggest likelihood was no winner, and a significant likelihood of a shared jackpot.
The odds were the same, but the EV was certainly higher than most draws. Still, the EV was likely negative. $2 ticket x 303 million-to-1 odds would require a post-tax cash-in-hand value exceeding $600 million, which the winner is unlikely to see after tax, despite avoiding a split with a second winner.
It's amazing how big these lotteries have gotten over the past 10-15 or so years. It used to be that $50 million was a lot for a lottery, but now we're talking Forbes 400 levels of wealth. This is like big tech or hedge fund levels of wealth.
It's interesting how much attention lotteries get when the jackpot gets this high. For the average 99%er, what does a billion do for you that a hundred million doesn't? Both are so potentially life changing that it doesn't seem to really matter which one you get. On a good note, it appears that winners of large lottery jackpots in recent years have been doing a much better job of managing their winnings that those in the past. Guess the stories of people going bankrupt a few years later have started having an impact on the general public.
Yeah I can imagine no circumstance in which winning that kind of money in full view of the public could be good for anybody. Like even if you said “I am giving it all away,” either a) people don’t believe you and want some money and think you are a bad person if you don’t give it up and you are publicly shamed or b) you obsessively document where the money is going and people don’t agree with how you have it away and you are publicly shamed.
Out of idle daydreaming (because I had bought a ticket), I started wondering what I would do right after discovering I won (and yes, I've seen that Reddit post with all the financial, legal advice). I don't mean who I would give money to, or what to do with the $.
No, I'm talking about technology-wise, would I (in the interest of protecting my newfound $):
-- Before claiming prize, immediately disconnect/uncouple all financial apps and services from my publicly discoverable phone number (to prevent financial hijacking of accounts)
-- Disconnect my phone number from my iCloud / iMessage and link instead with my private email address (to isolate randos contacting me by phone number)
-- Take the approach to get 3-4 clean iPhones,
Phone #1) for iMessaging / Whatsapping with friends, family who have my email,
Phone #2) a new phone number for only answering telephone calls from same,
Phone #3) for all financial matters/apps, and phone is used only for that
Phone #4) my old phone number in case I still need to receive something, but which will get flooded with spam.
-- Remove any public videos of myself, or even wipe my voicemail recording, so that my voice is not known to anyone and could be used maliciously?
-- Would I swear off any further commenting (or even delete my accounts) on Reddit, HN, other sites for fear that it could link back to me and open me to some hacking vulnerability? The phone strategy above is with the notion that someone sends you a poisoned text message and it scrapes/hijacks your financial accounts, etc.
All of this of course focused on the likelihood that once your name becomes public, hundreds of malicious actors will be trying to find some way into your accounts. Or is it that when you reach this tier of having money, your banking is just not done the same way any more?
And then all the usual of moving to a temporary private / unknown address, talking to lawyers/finance, going on vacation for a year, etc.
None of us are the individual who won, and none of us are likely to be one in the future, so the impact of this "news" is phrased backwards. A more accurate phrasing would be the following headline:
> Government realizes 1.6B accrual from gamblers ignorant of odds.
After ticket sales were tallied, the final value of the jackpot was higher than an initial estimate of $1.28 billion. The winner has the choice of a cash option worth an estimated $780.5 million if taken as a lump sum payment instead of the annuity option with 30 payments.
Seems $1.34B is a marketing number and the actual number is $708.5M pre-tax (58% of marketing figure). They also encourage you take money every year for 30 years instead, probably paying out a bit extra and banking on your incapacity to calculate for inflation.
I was suggesting they likely offer now-payout-total + maybe 20% over 30 years. But at say 5% inflation you're worse off than taking the money now and having it work for you. Their main motivation in doing so is obviously to smooth out their accounting (cheaper to service their debt over time) but if they can simultaneously discount the payout by exploiting financial illiteracy, then why not?
> but if they can simultaneously discount the payout by exploiting financial illiteracy, then why not?
You're not entirely wrong - your total expected payout is better if you take the lump sum and invest wisely. However if you don't trust yourself to have good discipline and strategy and annuity version isn't entirely crazy. Your EV is lower but you can't completely screw yourself.
Having your money "work for you" requires discipline, awareness, and trust in economic stewards far beyond what the average lottery player is capable of managing. The annuities still offer life-changing sums of wealth, but also guaranteed to give you 30 years to learn how to handle that much rather than accidentally spending it all in 3 years.
> They also encourage you take money every year for 30 years instead, probably paying out a bit extra and banking on your incapacity to calculate for inflation.
Knowing that most people winning lottery ends up as a bankrupts I would encourage that as well. Maybe I would even took that deal, even if I earn more than most people having that much money is very risky
How does that work? In most places I've lived and worked, the amount you get taxed is quite variable based on a ton of factors... does this mean they have flat income taxes?
What salary? Seriously though, the main difference is the headline figure vs. the nominal payout. (Almost 50% difference). Then there's tax, which in many countries (not the US) would be nearly 50% again.
That is not my understanding. $1.34B is apparently the total winnings of all people that round, not the winner. The winner is entitled to one of two options, either a $708.5M single payout or an undisclosed higher total as an annual payment over 30 years. There may be a very large long-tail of small winners.
(Edit: Can't reply: the understanding comes from a lifetime of experience with weasels. They use the figure to describe the round, the winner is not entitled to the round total. This is an intentional marketing doublespeak on their part.)
Computer scientists do not play the lottery. They know it is considerably more likely they'll be stuck by lighting 30 times than ever win against 300M+ to 1 odds. Also, computer scientists are virtuous, so they wouldn't gamble regardless.
Those are really crappy odds.