Back when New Jersey first introduced its lottery, I interviewed a pair of public school teachers–I’m guessing they did not teach statistics and probability–who spent their life savings, $20,000, on lottery tickets and didn’t win a thing.
They had succumbed to the lottery delusion.
They didn’t understand it. “But that was all our money!” they lamented–to me, as if I could get it back for them. “We have nothing left.”
I got the state lottery commissioner on the phone. “Twenty thousand dollars doesn’t make even a tiny dent when the odds against winning are tens of millions to one. I don’t think these people understand that.”
Nor can we understand why the state encourages people to spend (to them) prodigious amounts of money on a fool’s gamble.
I have never bought so much as one lottery ticket. The best description I have ever heard for the lottery is that it’s a “voluntary tax on being bad at math”. There’s no skill which can tip the odds in your favor. Lotteries never pay out more than they take in. In reality, a lottery amounts to the participants contributing to a common pool, and then the lottery returns half the money, but only to a handful of participants. The key is, only half of the money is given out in prizes.
I think of it as a ticket to dream. Spend a buck on a ticket and enjoy dreaming of what you would do if you happened to win a big payout. If everyone only bought one ticket, it would be relatively harmless, but people buy obsessively and to their own harm. More than once, I’ve seen people at convenience stores buy numerous tickets, go out to their cars to scratch them, then go back inside, in a frenzy, and buy more tickets. It’s like a drug to such people. So when someone wins, part of the money they won came from people that were caught in such a frenzy and were obsessively buying tickets they couldn’t afford. I want no part of it.
Easy money is money easily lost, and many lottery winners end up blowing through their winnings quickly and returning to the level of prosperity they had before winning. A bankruptcy along the way is not uncommon, because sadly, many lottery winners are not skilled at managing money and end up deeply in debt.
To say nothing of the state promoting foolish and self-destructive behavior.
Are you questioning the moral character of our leadership? 🙂
I agree completely. The Colorado lottery was sold to the public on the basis that 1/2 of the money would go to fund parks, etc. People rationalized their purchase of lottery tickets by claiming that they were helping the greater good. That makes no sense whatsoever. If I wanted to contribute to parks, it would make more sense to contribute $50 directly to the cause than to spend $100 on lottery tickets, and have only $50 go to improve parks. It’s a flawed premise, in my opinion.
On several occasions I have seen people who are obviously of modest means buying lottery tickets in a frenzy. This isn’t good for anyone. The examples I’ve seen were people that obviously had better places to utilize what money they had, such as buying decent clothing or a reliable automobile. They were prisoners of a dream; the dream of a big payout, but it’s a dream that is very unlikely to ever come true. As I’ve heard it expressed, ‘your odds of winning the lottery are about the same whether you buy a ticket, or not’.
What net worth I have was earned and I have saved out of my earnings. There’s no “easy money” involved, and I am very careful with my spending, because I know how hard it is to accumulate more. But this mindset pays off handsomely. I had $2,000 in unexpected expense about a month ago, and I was able to weather the storm, because I am careful. I “loaned” myself $500 out of savings and paid it back a few days later. It involved being very careful with my money for about a month, but now I’m doing fine. It’s not the only time I’ve had to ride out such an event, but the point is, I got through it without incurring any installment debt. Debt is something we need to avoid, if at all possible.
Sadly, lottery winners frequently adopt a much different strategy. If their winnings are on a structured payout, there is a temptation to incur massive consumer debt. A new house, a new a Corvette, a new 4×4 and all sorts of furnishings, etc. to fill up,the new house. They can find themselves mired in debt quite quickly and between the upkeep costs for their new possessions and the interest on all of their debt, they may end up living on a tight budget for years to come. There is a local legend regarding a man that bought a very expensive automobile when he came into some money, and now it sits covered in dust because he can’t afford the upkeep. The illusion of immediate wealth caused him to lose sight of the ongoing costs of upkeep. This sort of thing can happen easily to a lottery winner.
An acquaintance of mine won a huge lottery, back in the ‘90s. He was a man of means before winning and knew how to deal with the situation. He didn’t buy new cars, and I don’t know that he bought a new house. He established a trust, immediately and had to buy an insurance policy to protect his wealth. This insurance policy cost about what I earned in a typical year. Winning over $10,000,000 actually cost him a lot of money, up front.
Poverty can’t be cured with infusions of cash. It requires a learning process to help people that have lived a life of financial emergency to learn how use money as a tool. My work experience includes managing a budget of over $400,000 per year, and I can state from experience that you have to keep track of your spending, or you will end up in big trouble. $400,000 sounds like a lot of money, but it comes down to projecting expenses and managing every expenditure. It can become a wild ride, if some unexpected cost comes along. I learned how to do this, because my livelihood was at stake. If I botched my budget at work, I could lose my job.
Someone that had lived on the edge of poverty all of their lives, coming into money for the first time has a steep learning curve ahead of them and the consequences of failure is an express trip into debt and poverty.
My mother had a friend, a successful businesswoman, who was obsessed with a “system” she invented for winning the lottery–which of course never happened, it was always “just missed!” And she would go on and on and on about it, too. You could run screaming to the sidewalk.
I have learned that nothing will dissuade someone if they are convinced that there is some controlling logic behind random events. While it is possible that there are people that have cheated lotteries, working from the inside, there are no “lucky numbers”, etc. In my opinion, it’s a waste of money.
I do buy a ticket now and then. Usually when I’m buying gas or something. The rules are different for lotteries and gambling in Canada. For example, casinos have to donate/fundraise for charity. I once volunteered to work the cash counter at a casino to raise money for a friend’s daughter’s gymnastics team. Lottery winnings are not taxed, so if you win the jackpot, you get the whole thing. The lottery commission offers the services of a financial adviser to all big winners.
One of our local families that I know, won the jackpot on a spur of the moment, quick pick ticket. More than $20 million. Understandably, they soon closed their social media accounts and probably changed their phone number to an unlisted one. When the husband was interviewed while picking up their winnings, and asked what he planned to do, he mentioned getting their old pick up truck fixed up. He had been through some major health problems, unable to work, they’d just had a baby, and had been in dire straits. The win couldn’t have happened to a nicer family. They still live on the farm, the daughter still goes to school public school. About the only thing that I could see that changed is that, when I last saw the mom meeting her daughter when the bus drops her off at the highway (at the end of their half-mile long driveway), she was driving a new utility vehicle instead of their old SUV.
In the end, I think lotteries expose what is already there, much like alcohol can.