Unprecedented Lottery Jackpots Hide Troubling Realities


Lotteries are a regressive form of taxation, which means those who can least afford to play spend the most on lottery tickets, Dawes writes. (Photo: EthicsDaily.com)

Record lottery jackpots in the United Kingdom and United States have grabbed international headlines.

The U.K.'s national lottery saw an unprecedented prize up for grabs last week - £66 million ($95.9 million) that was won by two folks who will share the jackpot.

The U.S. Powerball lottery offers an even bigger prize - $1.3 billion, the largest jackpot in U.S. history and nearing world record proportions.

News outlets, such as NBC's Today show, have included lottery-focused segments in their daily broadcasts since last week.

"Here's a headline," Today's Savannah Guthrie commented last Wednesday, "Powerball fever sweeping the nation," before sending coverage to correspondent Kerry Sanders.

He told viewers, "The chances of winning are 1 in 292,201,338. So basically, you're more likely to get struck by lightning, become president of the United States, get bitten by a shark or die from an asteroid."

Sanders also emphasized that your odds of winning are statistically about the same whether you bought one or 10 tickets, so, he urged, "don't go play the whole paycheck while trying to win."

Sadly, many are not heeding his advice.

An Arizona clerk told USA Today that he has seen as many as 600 tickets sold in a day, with most folks buying multiple tickets thinking it will improve their odds. "I've been in here when two people have bought $500 worth of tickets," he added. "You never know what they'll get."

One player who spends $12 per week - $624 a year - on Powerball tickets told the paper, "I don't ever miss. You don't ever change. You play consistent. I almost got it twice."

Even more troubling than these anecdotal stories is the Powerball website's FAQ addressing the question, "Is There a Secret to Improve Your Chance of Winning Powerball?"

"It is obvious that buying more tickets will help, but the odds are still high and hitting the jackpot is still a question of fate," the answer begins.

It seems a widely held notion that buying multiple tickets significantly increases odds of winning. Statistically, odds are reduced by such a minimal amount that purchasing more than one ticket isn't worth the investment.

Yet, the Powerball FAQ adds a more troubling addendum: "The secret to the dual-drum games is that they pay a prize for matching just one number from the second drum. There are 35 numbers in Powerball's second drum and so, if a group buys 35 tickets in the Powerball game, each with unique red Powerball number, then you are 100 percent guaranteed to win the $4 prize, at least."

Tickets are $2, so it seems that Powerball is encouraging groups to consider spending $70 collectively to cover all 35 possible combinations to ensure that they win at least $4.

Lost in the excitement about the largest prize in Powerball history are two realities:

1. Lotteries are a regressive form of taxation, which means those who can least afford to play spend the most on lottery tickets.

According to The Atlantic's senior editor, Derek Thompson, $70.1 billion was spent in the U.S. on lottery tickets in 2014.

"That's more than Americans in all 50 states spent on sports tickets, books, video games, movie tickets and recorded music sales" combined, he noted.

Thompson explained how the poorest Americans purchase roughly a third of all the annual tickets sold, a trend supported by data from the 1980s to the 2010s.

He concluded, "A political cynic might say lotteries are the perfect public policy: A tax disguised as a game without an organized lobby to oppose it."

Reggie Warren, pastor of Union Hill Baptist Church in Brookneal, Virginia, and an EthicsDaily.com contributor, put it more bluntly. "I contend that if a group of smart people lacking ethics met to devise ways to get people in all economic classes to give their money away and to be happy in the process, the idea of a lottery would result."

2. The Powerball jackpot is the accumulation of all the purchased tickets since the last prize - minus the amount that is given to charitable causes and spent on administrative costs.

Lottery ads often focus on the fact that they help fund positive initiatives.

The Texas Lotto website says: "Supporting Texas Education and Veterans."

The Illinois Lottery has a "Giving Back" page highlighting their charitable donations. "You're not just buying a Lottery ticket. You're buying 18 billion possibilities," emphasizing the total amount given to these causes since the lottery's inception.

The reality? A small percentage of the ticket price makes it to these causes. According to CNBC.com economics reporter John W. Schoen, "About 72 cents of every state lottery dollar goes somewhere else."

He explains, "About 60 cents goes to the winner. Some goes to run the lottery. A piece of it goes to a private, Italian-based conglomerate that operates lotteries and slot machines in 50 countries around the world. Depending on what state you live in, that leaves as little as 11 cents left to pay for the government services these games were created to help."

Lottery ads that focus largely on the charitable causes supported are misleading, presenting lotteries as quasi-charitable organizations when they are government-run gambling operations that function as a regressive tax - cheery advertisements notwithstanding.

The lottery requires billions of dollars to be spent so that millions can trickle down to education budgets and other positive initiatives and organizations.

This at a time when community organizations bringing social capital to their neighborhoods - schools, churches, other nonprofits - struggle to secure funds to meet their annual budget and continue their work.

Individuals have a choice in how they spend their money, and many should be more responsible with their checkbooks.

Government cannot dictate personal financial responsibility, but state governments should not be dangling the "carrot" of an escape from poverty, debt or a daily job via a game of chance in which the odds are never in the player's favor.

Society would be better served if the billions spent annually on lottery tickets were diverted to organizations that make a direct, positive contribution to their communities.

Zach Dawes is the managing editor for EthicsDaily.com. You can follow him on Twitter @ZachDawes_Jr.

Editor's note: Additional articles offering moral reflection on taxation are available here, and learn more about EthicsDaily.com's documentary on faith and taxation, "Sacred Texts, Social Duty," here.

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Tags: Gambling, Lottery, Taxation, Zach Dawes


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