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Another Perspective
Lottery Lessons
Government at its worst, and so of course it gets away with it, preying on the dumb citizenry.
As happens on a fairly regular basis, a lottery has been in the news. The latest example results from a record jackpot of $654 million.
Lotteries are instructional for a number of reasons. Believe it or not, Adam Smith discussed them in The Wealth of Nations (published in 1776):
In order to have a better chance for some of the great prizes, some people purchase several tickets, and others, small shares in a greater number. There is not, however, a more certain proposition in mathematics than the more tickets you adventure upon, the more likely you are to be a loser. Adventure upon all the tickets in the lottery, and you lose for certain; and the greater the number of your tickets the nearer you approach this certainty.
The chances of winning the lottery are not significantly affected by whether or not you have a ticket. The chances of winning the latest lottery were said to be one in 170 million. There’s no practical difference between zero and .00000001.
Lotteries are an indication of the moral depravity of government. They are essentially a tax levied in proportion to a person’s ignorance of probabilities. They are a scam perpetrated by the government. Lotteries make probability ignorance a crime and the ticket price is the fine.
You could argue that buying a ticket is voluntary exchange, but it is exchange based on cynicism and deception. When it comes to lotteries, governments follow W.C. Fields’ sage advice, “Never smarten up a chump,” as well as, “Never give a sucker an even break.” Lotteries are nothing more than a state-sanctioned numbers racket. The state adds insult to injury by outlawing privately sponsored lotteries.
Most taxes and fees are in some proportion to some quantity. Income taxes are a function of your income, gasoline taxes are a function of how much gasoline you purchase, property taxes are a function of the value of the real estate you own.
Government revenues generated by lotteries are a function of what quantity? The answer, of course, is ignorance. If ever there were a bad bet, especially in terms of magnitude, it’s lotteries. The percentage taken by the “house” is many times higher than any casino game.
Getting rich by winning the lottery is profoundly different from just about any other way of doing so. Most people who are rich have become so by taking some action—hard work, using their talent, being creative, for example. By contrast, winning the lottery involves none of these factors. Winning has absolutely no connection with the rest of reality. The money received is not “earned” in any way. It involves nothing but dumb luck, emphasis on dumb.
It’s a truism that money cannot buy happiness, but numerous stories about past lottery winners lead to the conclusion that lottery money can buy unhappiness. There seems to be something unnatural about receiving such a large amount of money in such an unreal way.
It could be argued that lotteries give hope to millions of people. Hope, however, is not inherently good. Some kinds of hope do more harm than good. Winning millions of dollars in a lottery is a false hope. It is not one based in reality. There is an opportunity cost to that kind of hope. It deludes and distracts people from hopes and ambitions that do have a basis in reality. Hoping to win the lottery enables people to live in denial.
Large lottery jackpots are taxed at the highest federal tax rate, allowing various levels of government to get you both coming and going. For some bizarre reason, possibly guilt, in California lottery winnings are not subject to the state income tax.
Government sponsorship of lotteries should be proof that government does not have the citizenry’s best interests in mind. Government’s heart is clearly not in the right place.
Don’t be a loser or a chump. Don’t buy lottery tickets. It’s the kind of thing Shakespeare was referring to when he wrote, “It’s a tradition more honored in the breach than in the observance.”
About the Author
Ron Ross Ph.D. is an economist who lives in Arcata, California. He is the author of The Unbeatable Market. Reach him at rossecon@gmail.com.
Letter to the Editor View all comments (93) | Leave a comment
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jlkthree| 4.12.12 @ 7:19AM
$4.50 coffee also dunb.Fine dining,also dumb.Its much cheaper to cook at home.
Everyone has disposable income,even the poor.Life is pretty bland otherwise.
Brian Mc| 4.12.12 @ 8:19AM
Your analogy is quite a reach. The gratification from a good cup of coffee, or a fine dinner with my wife holds no comparison to a tax on the mathematically challenged. I did not 'lose' anything from the exchange. You, however, gotta play to lose; I will continue to utilize my income differently and stand patiently while you're ahead of me getting your quick picks.
Todd S| 4.12.12 @ 9:03AM
Spoken like a true loser. Doesn't it warm the heart to know the welfare bums are buying lottery tickets because it gives them "hope" and gives them something to look forward to after sitting on the couch all day watching Jerry Springer?
jlkthree| 4.12.12 @ 10:06AM
Nope.$4.50 coffee is a "waste of money" if every dollar counts.$95 Ralph Lauren Polo's,also bad.
Todd S| 4.12.12 @ 1:41PM
So you think it is okay for the government to run a lottery monopoly that preys on the stupid and gives false hope? I refer to it as a tax on the stupid but it is certainly gross hypocrisy on the part of the government to promote lottery's. Is it not like a tax (volunteer) to take from the 99 to make a 1 percent who did nothing to deserve it? I feel sorry for people that play the lottery, it is pathetic really.
Appleby| 4.12.12 @ 7:55AM
Most of us who buy our weekly $3 lotto ticket are fully aware of your whine, and of the fretful cranky advice to spend that $3 on ... what? An evening at the movies costs $18 even if you don't buy more than popcorn, and at the end of the night you go home having seen a piece of time-wasting trash in a theatre full of people tweeting and yammering and shouting into their cell phones "What? What? I can't hear you! I'm in the effing movies, dude!" How is this more profitable than spending $18 on the chance for a $650 million jackpot? The anticipation and the dream of a weekly lottery lasts a whole week; the disgust at the waste of money at the movies begins before the movie ends. And that's not even talking about the thousands of hockey fans who pay the highest prices in North America to watch the Toronto Maple Leafs flounder off the edge of the cliff and ignominiously exit before the playoffs for the seventh year in a row!
If you don't find the lottery entertaining, don't buy a ticket. And when I win, don't write to me demanding your "fair share." In Canada we don't pay taxes on gambling wins, because that encourages people to gamble. Our jackpots are not as big as American jackpots, and we all know the odds. But a week of daydreams is worth $3 anyway.
jlkthree| 4.12.12 @ 8:15AM
Right on! The ecomomy would be much worse with everyone truly spending ALL their money wisely.I'm going to breakfast today with my father.My breakfast will cost me $7.50 with tip.Valu-wise,its a very stupid thing for me to do.At home I could make it for $3.00 or less.But its nice not having to cook.
Bruce| 4.12.12 @ 10:36AM
jlk;
I would argue there is significant value in having breakfast with your father. However, wouldn't it be more meaningful to be able to carry on the conversation in the privacy of your or his home and make the experience more "intimate"?
tyn| 4.12.12 @ 9:05AM
So $3 per week, $12 in a month or maybe $15. Add that up in a year and you can do some good in someone's life with it.
Buy some used (good quality content) books for just $1 or $2 and donate to a family to emphasize book learning to young kids.
Maybe that money feeds a family of four in places around the world for three months. (This is so.)
Maybe it buys a pet for a senior who can still live on his own but is very lonely.
And, let's be honest, who holds themselves to just that $3 per week? Same person then justifies quarter slots an annual trip to a riverboat casino, a few sports bets during the year, participation in the office bet pool.
Simply put: We are not wise with our money. And we think it is our money in the first place to do with as we choose. It's not.
The lotteries are just more examples of our non-stop selfish foolishness.
So you want "daydreams?" How about making real dreams for someone else: Try freely giving that $3.
Bruce| 4.12.12 @ 10:39AM
I don't buy good quality content used books because I like to not have to get past the dog-eared pages and broken spines. However, I read a lot and purchase lots of new books once the price has come down to a reasonable level. I then donate the books to my local library which is fairly small. This allows many more people to use the book than just donating it to a specific family.
Tired Taxpayer PRM| 4.12.12 @ 11:33AM
"Simply put: We are not wise with our money. And we think it is our money in the first place to do with as we choose. It's not."
Huh? Whose money is it? Obama's? God's?
By the way, I never buy lottery tickets, play slots or make sports bets. I am just wondering whose money it is?
Sammi| 4.12.12 @ 1:19PM
TTPRM, it's God's. Just like your life.
Don't just look at what is in your wallet or bank account. Look at all your resources. Time. Your talents. How are you using them? For your purposes and glory or for His?
That is what all of us must come to understand.
Appleby| 4.12.12 @ 7:59PM
I do all those things with other money that I have. In point of fact, what you are forgetting is that IT'S MY MONEY. If I want to throw it off the balcony and let it float away in the breeze, what's it to ya?
Tell the other people who are out there whining resentfully that every single spoonful of my dinner is depriving them of something I OWE THEM, to shut up and buy a lottery ticket...and then write a short story about it and maybe they can sell it to a magazine. Then some whiney-heinie wil be sitting on their doorstep crying that the money you made belongs to HER, and you have no right to spend it on anything for yourself, ever.
There's a reason why "Thou Shalt Not Covet...anything that is thy neighbour's" made the Top Ten of God's Commandments. Read that commandment and think about it instead of obsessing about my $3 lottery tickets.
Brian Mc| 4.12.12 @ 9:28PM
But, isn't that jackpot conceived from thy neigbor's goods? And, if so, are you not coveting it by buying the tickets?
Moe Blotz| 4.13.12 @ 4:15PM
No, I throw a dollar or two at the jackpot to build it up and am aware the odds are against me. Sure would be fun to hit a multi million dollar jack pot and then give the $$$$ to worthy charities. Shame on the states for advertising the "get rich quick" aspect that appeals to suckers. New Jersey's lotteries were not allowed to advertise upon their inception, but now you can "Give Your Dreams a Chance". Our hopes and dreams are to hold down a decent job, provide for our families, live a long and fruitful life. I never would put my dreams into a game of chance.
Darin| 4.12.12 @ 8:21AM
View it as entertainment. You spend $10 to go to the movies and be entertained for 2 hours. The few times I've hit a casino, I went in with $20 and was entertained for as long as the money lasted. As long as you keep it in perspective, you're fine. The problem is when it consumes you. You keep gambling under the false hope that you'll eventually win. If you don't have the willpower to stop, then don't start. Likewise the lottery. Spend your couple bucks on entertainment and stop. Don't let it control you.
Herb| 4.12.12 @ 10:33AM
I've wondered for years why powerball jackpots reach such fantastic levels for a single lottery winner. What if, just what if a jackpot were to be divided? Let's say it hits $100,000,000.00. If lottery officials announce that instead of one winner of the total, 1,000 ticket holders were to win $100,000.00 each, what would be the effect?
First of all, a thousand winners instead of one. More importantly, most folks know what they could do with an extra hundred grand; buy or improve a house, send their kids to college, endow their favorite church or charity, take a world cruise and have money left over, or..... wait for it....... wisely invest the 100,000 dollars and make it part of the nest egg we're all going to need someday.
Multiple winners of a fraction of the whole. Odds of winning greatly increased. A windfall of realistic size that can benefit the winner's life.
Make sense? Too naive? I don't know.
DG in GA| 4.12.12 @ 8:49PM
Well, if 1,000 ticket holders get the same group of numbers, they would all win a fraction of the pot. Charities often hold raffles where you buy a ticket (or 12) and the winners are chosen out of a hat. You win the prize if your ticket is drawn, and several people get to be winners. How is the Megamillions or Powerball really any different?
I say, it's MY money, and if I choose to buy 1 ticket every month or so for fun, so what? To the people who sanctimoniously say "Well, you could be giving that money to the poor or buying used books, blah, blah, blah," I say, "hey! I do that too." I buy new hardcover books every week, keep them for several years, read them several times and donate them to my local library where my neighbors can enjoy them as well. I spend a heck of a lot more money on those books every year than I do on lottery tickets, but either way, it's entertainment - not a retirement plan.
Bob S| 4.12.12 @ 12:03PM
If the people who play are okay with it, why do the do-gooders care? Another example of people who know how to run your life better than you.
Before they come to ask, "No, I do not eat brocolli every day. Yes, I know it is good for me."
I see the lottery ticket as cheaper and healthier than sleeping pills. Having trouble getting to sleep, I can focus on what to do with those millions rather than what I have to do at work the next day. Of course, then the do-gooders will tell me if I do not "love" my job, it would be better for me to spend the money on finding a new career.
Just leave me alone please and mind Your own business.
Todd S| 4.12.12 @ 1:46PM
There is a difference between casinos and government lotteries. The government would shut down any casino that kept such a high percentage of the money. Also there is more entertainment value in casino games then just buying a stupid ticket and a decent chance to win something. Gambling is a very dangerous thing however and can be very addictive and is best avoided like any other vice.
Appleby| 4.12.12 @ 8:01PM
The government of Canada RUNS our casinos. It's the only thing in the Province of Ontario, besides the liquor stores, that makes a profit.
C. S. P. Schofield| 4.12.12 @ 9:19AM
OK, grant for the sake of argument that the Lottery is a tax on stupidity (a position that, I think, can be argued). Now explain to my what is wrong with taxing stupidity.
Bruce| 4.12.12 @ 10:40AM
Not a thing. Most "sin" taxes (cigarette, alcohol, etc.) are taxes on stupidity IMO.
TrueBlue | 4.12.12 @ 11:39AM
Alcohol provided a clean source of drinkable liquid for quite a long time (still does in certain parts of the world). Wouldn't exactly call it something stupid. The stupid is when people drink too much of it, just like most other "sins" it's a matter of moderation. Red meat is good for you, if you don't eat too much of it. Same with alcohol, chocolate... heck, even OJ is bad for you if you drink too much of it.
Tired Taxpayer PRM| 4.12.12 @ 11:36AM
If you tax something you get less of it.
Now, how can we tax stupidity more often?
More lotteries?
DG in GA| 4.12.12 @ 8:53PM
You know, it's not a TAX because it is not mandatory! Taxes are confiscated by the government under threat of imprisonment. I guarantee that if taxes were voluntary, as is the lottery, NOBODY would pay them. Not even the rich liberal idiots like Bruce Springsteen who argue that the rich don't pay ENOUGH. So leave the lottery alone.
Brubaker| 4.12.12 @ 9:27AM
Every bit as reliably as the rising sun, each large lottery jackpot brings forth a spate of self-righteous and pompous indignation that the "mathematically challenged" are too stupid to understand the virtual certainty that they will not win.
Dr. Ross, you and your kind completely miss the point. I don't personally play the lottery, but I know many who do. Without exception, they do so as a form of entertainment. It's just fun. You do recall that concept, don't you? Okay, for you it isn't fun. We all get that. But for a great many people, it is fun. Different strokes, and all that.
One final thought. Although the odds are incredibly high that any given number will be a winner, someone has to win. Those are the rules.
Bruce| 4.12.12 @ 10:44AM
"Someone has to win" is a false conclusion. That may be the ultimate conclusion, but not every lottery has a "winner" of the big prize. That's why the lottery amount get so high. All those losing tickets build the pot. It's kind of like "Jacks or better, trips to win" in poker. The pot grows large based on one person having a pair of jacks or more to open the bidding. However, those trying for a straight, flush, or other hand to meet the "or better" portion of the equation will continue to add money to the pot. Not every hand will produce a winner, because the odds, like in the lottery, become slimmer.
P.Smith| 4.12.12 @ 9:32AM
From what I understand is that the illegal lottery operated by organized crime in New City pays out a larger percentage of its ticket sales than does the state. If this is indeed true, it is interesting to me that organized crime rips off the citizens less than the state.
Reality1| 4.12.12 @ 9:49AM
The good Doctor misses two CRITICAL points in his thesis. One, labeling large segments of the population ignorant or stupid because they do something you don't like or do is blatant superiorism; Two, the argument he makes destroys freedom of choice if it is followed to it's logical conclusion.
albert constantine jr.| 4.12.12 @ 10:11AM
Up until now, "elitism" has been frequently used to label what you describe in point one, I will be adding "superiorism" to my vocabulary of "isms" as a synonym.
Frank Drackman| 4.12.12 @ 5:01PM
"vocabulary of "isms"??
how about "jism-ism"?
Frank
albert constantine jr.| 4.12.12 @ 7:56PM
(It is my fault, I jumped into it).
My apologies to the sensitive and easily offended.
Doctor, that's a pretty spunky reply.
TrueBlue | 4.12.12 @ 11:42AM
Amusingly that's the same term used to label a lot of liberals. Sadly, both are true.
If you don't like it, don't do it, but don't put down other people that enjoy it. It doesn't hurt you anyway.
Occam's Tool| 4.12.12 @ 6:15PM
The lottery is just another regressive tax on the poor. Naturally, Liberals love it, because they hate poor people and want to keep them enslaved.
seminar| 4.12.12 @ 10:02AM
I don't think a number of readers get it here -- today.
The lottery is now ubiquitous. It was not in America 50 years ago.
Now there are more powerballs than ice hockey powerplays in a full NHL season.
Herein is one massive problem: Your ugly, repugnant, overspending, unregulated, unchecked leviathan governments rely on this vice. They must have that big cut. They need it like a junkie needs his next hit. Yes, your magistrates from police chief to mayor to state legislators to governors to judges AND ALL THE CIVIL SERVANTS WHO SERVE THEM are addicted.
Your local, city, and state governments look to and focus onthe lottery for revenues instead of looking to decrease the size of government to a small, manageable, responsible level.
Frankie| 4.12.12 @ 11:10AM
Absolutely 100% on target. Here in NC they whined about education to pass it. Pass it did, and it only increased how much they whine about education. They think "education" brings out the Pavlov in the suckers they rule over.
TrueBlue | 4.12.12 @ 11:44AM
That comes down to the people that get elected, and those who elect them, not the lottery itself. However the fact that it's illegal to run a lottery that isn't state run IS pretty stupid.
Robert Nowall | 4.12.12 @ 10:07AM
I take my theory of playing the lottery from a couple of lines in an episode of "Perfect Strangers." You have a better chance of being struck by lightning than winning the lottery---but who wants to buy a ticket for that?
albert constantine jr.| 4.12.12 @ 10:08AM
"The chances of winning the lottery are not significantly affected by whether or not you have a ticket. The chances of winning the latest lottery were said to be one in 170 million. There's no practical difference between zero and .00000001."
Tell that to the person with the winning ticket, or any of those whose partial fulfillment of the winning number lead to rewards significantly higher than the investment.
I always thought the lottery example disrupted Einstein's definition of insanity (doing the same thing over and over expecting a different result), in that a frequent player who wins gets a different result.
PolishKnight| 4.12.12 @ 10:38AM
I thought that statistical claim was funny too, Albert. The "practical" difference between 0 and a 10^-8 is that you still have a chance, even a small one, of winning. Take a quantum mechanics class. 10^-8 is a VERY big number!!! Let's try this thought experiment: Let's say we bought a ticket for Ron for the jackpot and it was announced that there was a single winner. Would he throw the ticket away since he probably lost? Or would he make the effort to check? During that moment, he has the "hope" that he's a winner.
People get addicted to gambling because they DO get something out of it. The thrill. For a buck, it's not that bad even though I agree with the author that the way the lottery is run is a sham. The state takes most of the winnings while Vegas and other casinos run on much smaller margins.
For even working folks, that thrill is worth something. You won't believe your chances are good enough to tell your boss off and quit, but it gets you through the day that even if you had a bad day at work, there is hope and carry on. Hmmm, it sounds an awful lot like RELIGION and the hope of everlasting life? What are the odds that any particular religion you worship is the "right" one?
Frank Drackman| 4.12.12 @ 10:10AM
I only bet on Sure Thangs..
No such Thang as a Sure Thang?
Grambling State will NOT win the NCAA Ice Hockey Championship.
and.................................
2 Words:
"Tape Delayed Baseball Games televised on AFRTS"
OK, thats 7 words.
and(Mets fan)you have(Mets fan)to find someone Stupid(Mets Fan) enough(Mets fan)not to realize that a game broadcast at 1pm Central European Time isnt being played in real time...
Frank
Frank
albert constantine jr.| 4.12.12 @ 10:17AM
Doctor;
The hustle you describe is a variation of the wire con played out in horse racing featured in the film "The Sting".
Of course, in the joke, someone goes to the Mets fan and says "You realize he tricked you, the game was a replay", and the Mets fan replies "I know, I saw it the first time. I just didn't think they would make the same errors and lose it twice".
Frank Drackman| 4.12.12 @ 12:16PM
tricky part was getting the Mets fan to look away when they'd run the "Tape Delay" notice along the bottom of the screen...
"Look! an Elephant!" I'd yell
OK, I stole that from "Dude Wheres my Car"
Frank
Occam's Tool| 4.12.12 @ 6:16PM
Frank: Cubs win world series in 2012. Not.
That's a sure thing.
dm145| 4.12.12 @ 10:32AM
Dr. Ross, I am sure the owners of the three winning tickets for that massive jackpot last week are very glad they do not think like you.
Aaron| 4.12.12 @ 10:42AM
dm145 -- Will you do this? Will you?
Do this:
Follow their lives. See how those lottery winners are doing, 10, 15, and 20 years from now.
PolishKnight| 4.12.12 @ 11:05AM
The same result often occurs from other get-rich-quick scenarios: Becoming a famous actor or actress or singer, a rich athlete, and hitting it big on the stock market. Getting rich quick encourages vice but I don't know anyone who would say that they would give the money away or throw it in a trash dumpster to avoid that fate.
Curtis Rasmussen| 4.12.12 @ 1:54PM
I heard that 80% of pro athletes are broke within 2 years of retirement.
Curtis Rasmussen| 4.12.12 @ 1:58PM
Correction: 80% of NFL athletes.
PolishKnight| 4.12.12 @ 2:58PM
One of my all time favorite films is North Dallas Forty because when I first saw it, as a teenage boy, I was attracted to it because of the party atmosphere in the advertising and the beginning of the film. But then upon seeing it 10 years later, I saw the touching stories of what the pro-athletes go through and that's if they win!
Appleby| 4.12.12 @ 8:04PM
Doesn't matter; most of them end up in prison anyway, where they're well looked after.
My thoughts| 4.12.12 @ 1:35PM
Years ago Readers' Digest did an article on what becomes of Lotto or Jackpot winners. It wasn't pretty. Sorry, cannot say what year and month.
People make the mistake of thinking that winners get the lump sum or even 25% or 50% of it in the first months or year after "winning." Usually not so.
It is dolled out over time. Aren't lotteries just like Ponzi Schemes? The organization controlling the lottery doesn't have the total prize winnings of $500,000,000 to give out. They can only dole out this money over a long extended time period as new quarterly, semi-annual or annual lotteries replace the kitty.
Lottery winners, jackpot winners, big Vegas type winners are usually strung out in massive debt, purely lost money, horrid investments, financial obligations, divorces, failed business partners/ventures, legal battles. And the stress of trying to stay on top of it all is a never ending burden.
Everyone says, "No, it cannot happen to me. I'd handle all that money very smart." I doubt it. It probably wouldn't work out so smart.
PolishKnight| 4.12.12 @ 3:01PM
Are you sure? The lotto money was from ticket sales over the past few weeks so they had the money in the bank, literally. And keep in mind that they were only giving out a fraction of that money in winnings. THEN they cut that sum almost in half if the winner chooses to take it as a lump sum (which they'd be smart to do since over 30 years, with inflation, their winnings will be worth maybe a 4th of what they won!)
Then the feds take their cut along with the state so they probably get maybe a 1/3d of the jackpot if they're lucky (pardon the pun.)
MT| 4.12.12 @ 3:51PM
PK, ever heard of overhead? It is closer to a ponzi scheme. Cycle after cycle of vice.
PolishKnight| 4.12.12 @ 4:09PM
What overhead? They get millions of dollars in ticket sales and get to keep something like half up front. Then they get to keep another quarter in taxes and lump sum payout penalties. I expect that paying out the winners isn't a problem.
Rich D| 4.15.12 @ 12:54AM
You fail economics. The lump sum is the present value of the series of payments. The prize number is the sum of the unadjusted payment stream.
Bruce| 4.12.12 @ 10:32AM
Substitute the word "Obama" for the word lottery in this quote and you have an accurate picture. "It could be argued that lotteries give hope to millions of people. Hope, however, is not inherently good."
Scott| 4.12.12 @ 10:41AM
Here's what I don't get; when the Mega Millions was almost $500, something like 1.4 billion more tickets were sold, yet the jackpot only went up to $654 (or whatever it was). I assume it's the gub'ment taking a chunk, but then when there is a winner, they take another chunk. Is that the case?
Harry the Horrible| 4.12.12 @ 10:44AM
I don't see a problem with the lottery. It is entirely voluntary; you don't have to pay.
Better yet, it is a tax on greed, ignorance and gullibility. These things SHOULD be taxed. If only ALL taxes could be voluntary AND used to punish vice and ignorance.
Jon| 4.12.12 @ 11:33AM
Not that playing the lottery makes one an idiot (we bought a ticket ourselves), but...the Bible says that "a fool and his money are soon parted". If stupid people weren't spending money on lottery tickets, would they save and invest wisely? Would they become venture capitalists? Would they get their family members off of welfare? Or, being stupid, would they simply find some other stupid thing to do with their money?
TrueBlue | 4.12.12 @ 11:49AM
Better to spend that cash on the lottery than on drugs. Or heck, even going to a casino, the horse races, constantly betting on horse matchups. If buying a lottery ticket is stupid then what form of gambling ISNT?
Bill| 4.12.12 @ 12:20PM
Three public sector union members won the megamillion lottery, and I smell conspiracy, which is that the money stays at the hands of union thugs.
ncatty| 4.12.12 @ 12:44PM
No no no Dr. Ross. Let the poor and sick buy lottery tickets, its the only taxes they pay!
The Bruce| 4.12.12 @ 2:05PM
Good point.
Pat| 4.12.12 @ 1:21PM
Naively charming sermon but divorced from the reality of basic human greed. Yesterday, the WSJ reported independent survey results noting both Democrats and Republicans believe lottery winnings should be taxed at a lower rate than income earned through honest labor, or through other means in the case of our politicians. Why shatter the incredible elation of holding the winning ticket with worrisome thoughts of how much of your winnings our government will confiscate?
What’s a “fair” tax rate on gambling winnings according to survey participants – 10% seemed the popular answer. And there is nothing wrong with that assessment except the actual federal income tax rate hovers just below 35%. Win $100 million from the Lottery and Uncle Sam will only tax the first $400,000 or so at around 22% when you consider the graduated rate steps in our progressive tax schedules. But ordinary income over that almost $400,000 breaking point throws you into the Warren Buffett bracket of 35% - ouch. $100 million at around 35% tax – why that’s $35 million into Mr. Obama’s piggy bank and who was it who bought the winning ticket?
The most amusing part of the survey was that respondents thought winnings should be more lightly taxed than earned income. Such a concept must be near and dear to the hearts and minds of the Democrats. When fortune smiles on you and a ton of cash falls into your lap, you should get to keep it – or most of it. Kinda like our welfare system school of philosophy.
A 10% tax rate on lottery winnings? Sounds like something George Bush would have proposed. For B. Obama however that is patently ridiculous – and with 49% of Americans paying no federal income tax at all, it’s not the kind of patriotic American thinking we want to encourage. When you unexpectedly exit the bottom 49% and find yourself among the top 1%, it’s your duty to give a lot back – now if only average Americans would believe in that bedtime story.
cicero| 4.12.12 @ 1:42PM
Several years ago, in conjunction with the representation of a client who had been accused by the feds of mailing lottery tickets across state lines, I had to research the entire area of the law. There was a whole series of cases from the late 1800s known as the Lottery Laws. Those laws are still on the books. The Congress merely added one section to the law making the governmental bodies exempt from their prohibitions. All at once, the harlot got a new red dress (funding for education), and she became a welcome member of polite society. The whole thing is a joke on the citizens. The vast majority of the players are gambling money they can ill afford to lose. However, where else can you buy hope for a dollar a ticket?
Curtis Rasmussen| 4.12.12 @ 1:48PM
Life is full of vices, like smoking and drinking, which are potentially more harmful. Buying a few lottery tickets once every few months is relatively nothing, I am fully aware that my chances of winning are about as good as catching Obama telling the truth.
Frank Drackman| 4.12.12 @ 1:58PM
Back when the Florida Lottery was the only one in the Southeast,
My Idiot Brother in Law in Atlanta(don't be hatin on the South, he was from Brooklyn) asked me to pick him up a ticket for that weekends drawing.
He even said I could pick the numbers.
JTBAJ(Just to be a Jerk) I picked "1-2-3-4-5-6-"
"You Idiot!" he bellowed in that annoying accent that still makes me mourn that Stonewall Jackson flunked dodgeball,
"1-2-3-4-5-6" NEVER wins! he said
and he wouldn't listen as I tried to explain logically that "1-2-3-4-5-6-" has as much chance of winning as "3-12-47-15-26-22"
and I'd still bust his balls about it if he hadn't gotten a brain tumor and died.
Unlucky bastard, only time his number came up, it really came up..
Frank
The Bruce| 4.12.12 @ 2:02PM
I occasionally play the lottery. For me it's just entertaining. And one of two outcomes will be achieved in doing so: Either I'll win (1 in 170M chance), or I'll have given to charity (170M to 1 chance in favor).
Who cares, Ron? I'm pretty sure most people buy a lottery ticket with the understanding that they have about the same chance at winning as, say, being stuck by lightning while in the process of being eaten by a Great White Shark.
And I wouldn't call it a scam, as you say, because people do in fact win.
Frank Drackman| 4.12.12 @ 2:15PM
I occassionally kick midgets in the balls. For me its just entertaining. And one of two outcomes will be achieved in doing so,
OK, there the analolgy breaks down, but at least I don't have to stand in line behind all the other Idiots....
Frank
albert constantine jr.| 4.12.12 @ 2:29PM
Doctor;
Is one of the two outcomes that the midget replies with a head butt to your own groin? If your reply is in a higher octave, I'll take that as a "yes".
Occam's Tool| 4.12.12 @ 6:22PM
Albert, Frank: I love you two guys, but you both are bastards. Look what YOU made me look up:
http://extrememidgetwrestling.com/.
Yes, I blame YOU.
The Bruce| 4.13.12 @ 4:36AM
Frank,
First... what you do with midgets is your own business -- and God love you for it (I guess).
Second... my lottery purchase involves about 2 or 3 dollars out of my wallet, and about 2 or 3 seconds of my time.
Thank you for pointing out how stupid I am, telling me how to spend MY money as YOU see fit.
HINT -- I don't give a flying F*** what you think you know about how or why I should spend my paycheck. My paycheck is MINE, not yours. You didn't earn it, I DID.
Let's make a deal:
I won't tell you how to spend your paycheck, and you won't tell me how to spend mine. Deal?
Minuteman78| 4.12.12 @ 4:39PM
You're either a leftist or a total idiot. 50% of what you 'donate' goes to the Government, and Governments do NOT engage in charity. They forcibly confiscate and redistribute income.
The Bruce| 4.13.12 @ 4:20AM
Minuteman78,
Sorry. Apparently I wasn't aware of the hoards of government officials placing a gun to my head and FORCING me to buy lottery tickets.
They must be "speaking softly" to me as I sleep.
Can you do the rest of us a favor and seek the Meds you clearly need? Could you unravel the tin-foil hat a bit?
Earth to Minuteman: The Government isn't secretly injecting me with a substance that forces me to by Lottery Tickets, in order to "forcibly confiscate or redistribute my income."
Susan Benton| 4.12.12 @ 2:37PM
Ha, ha, ha - the joke is on the fools who buy lottery tickets. A tax on ignorance is exactly what it is. Great article - now if we could get our governments (mostly state) out of it I think the poor would be better off, and the governments would receive more respect.
GW| 4.12.12 @ 2:57PM
Dr. Ross wrote something I've felt for a long time. While I understand the arguments *for* a lottery--it's a voluntary tax, etc.--the morality of it seems to be backward.
Lest we forget, the reason for government is not to balance a budget or make everyone feel good, the reason for government is to protect our liberties. As conservatives and libertarians, most understand that at most this requires negligible and decentralized forms of power which don't need much tax money to function.
This is what makes a lottery so immoral--it gives the state a reason to grow larger. *If* governments were getting smaller and more decentralized and *if* welfare programs were abolished, illegal aliens were deported, and property rights were respected; a lottery would be acceptable.
MT| 4.12.12 @ 4:00PM
GW - best post I've read here today so far! Perfectly worded.
Except - perhaps (sorry) -- your last give words. Surely you don't mean any state (govt.) involvement in such a lottery, right?
All state run gambling is immoral. The state has no business being in vice. The state has no place dreaming up new tax sources and aiding in the addictions that lead many to ruin.
Once state bureaucrats, appointees, and elected officials have wads (or what they perceive to be wads) of cash to play with, they dream up new governmental nonsense -- that further ushers state tyranny in our lives.
And then they have to dream to make the lottery even bigger, a bigger pot of money, more winnings than ever before!
Where does it end? Answer: It doesn't until you've hit a debauched bottom.
The good state/society is not running lotteries, taking big percentages from dog betting tracks, horse betting tracks, casinos, and the good state would be removing Indian casinos.
Frank Drackman| 4.12.12 @ 5:06PM
"hit a debauched bottom"???
I've spanked, pinched, and admired many a bottom, but never "Hit" one.
and what makea a bottom "Debauched"
Frank
albert constantine jr.| 4.12.12 @ 7:59PM
See Modern Urban Dictionary:
"I'd hit dat".
Occam's Tool| 4.12.12 @ 6:24PM
Frank: the answer to that runs $250.00 an hour from a licensed Psychiatrist, and isn't much fun.
It runs considerably more from a professional dominatrix, but I suspect the fun quota is higher...
albert constantine jr.| 4.12.12 @ 7:51PM
Traditionally, health insurance doesn't cover the latter, but Nancy Pelosi, being from San Francisco, perhaps has a clause somewhere in the 2700 page bill. Plus, when I look at Kathleen Sebelius, I know there's a riding crop in her brief case.
Shaboe Delucks| 4.12.12 @ 6:33PM
Mr. Ross and Adam Smith appear to both be, um, intellectually challenged here. If you buy all the lottery tickets, of course you will win. Whether you make any money is a different issue. And a $654 million return on a $170 million investment isn't terrible. No, the point about lotteries is that there's no point in buying more than one ticket.
Magic Underwear| 4.13.12 @ 2:13AM
Believing in mine is my "winning ticket."
nathan| 4.13.12 @ 1:24PM
Lotteries existed in colonial times. The Founders apparently so no particular problems with them. Again if you treat them as entertainment then so what? But anything can be abused. Drunk drivers are directly responsible for 10,000 highway deaths a year. And yet we see those marvelous Bud Light commercials all over television. (The one with the dog is delightful. They are absolutely the best commercials on TV.) Given the deaths attributed to alcohol abuse, anyone want to go back to Prohibiti0n?
So why treat lotteries any different? At least people with 100 lottery tickets in their pockets don't cross center lines and kill families of four.
Richard Baker| 4.13.12 @ 2:37PM
What is amazing about these lottery "winners" is that regardless of the amount "awarded" as a result of the winning ticket, the state takes the majority of that amount BACK in taxes. Such a deal...for the state.
jlkthree| 4.13.12 @ 4:07PM
Lotto players know the long odds.They've made a value judgement,just like the $4.50 Starbuck's coffee buyer.Its the price of doing business.Disposable income,is disposable.