I was watching some Eeewwchoob show about the evils of the lottery and how it’s just a disguised tax on stupid people and the poor and yadda yadda yadda.
One of the statements was that if you were to win a lottery with an advertised value of, say, $100 million, if you chose to take the lump sum payout instead of the annual payout, you’d end up with only $26 million, after taxes and so on. ($100 minus the “lump sum penalty minus income tax.)
“Only” $26 million. (Here’s where the “opportunity cost” canard, so beloved of finance people and con artists, comes into play.) In other words, you’d be “losing” $74 million dollars because It’s All A Big Ripoff, Man. Except of course that you wouldn’t be losing anything, but gaining many millions that you never had before.
And I don’t want to hear the old hackneyed saying about whether you buy a lottery ticket or not, you still have about the same chance of winning — which would be true if nobody had ever, ever won a lottery prize. But as the newspapers are full of stories about how X won a lottery and then went broke after only a few years boo hoo, we have to assume that at least some people hit the jackpot. So while the odds against are cripplingly high, they are not impossible.
So I play the lottery every week. I only drop a few bucks at a time, because my feeling is that a $2 ticket is the cheapest dream you can get, and in any event I don’t live close to a casino where the odds are better but the payout is pathetic. And if you know how the stock market can be and is being manipulated by huge institutions and giant index funds like Blackrock and Vanguard, you’d forget trying that form of legalized gambling too.
And I’m not saying the following is true in my case, not at all. But something has occurred to me, as I’ve watched the economic news get worse and worse (thank you FJB) and the outlook becomes gloomier and gloomier, with prices skyrocketing and incomes remaining stagnant or even decreasing, with more and more hints that Social Security will end at some point, etc. etc.
I can’t help wondering that if all that shit really does hit the fan: how many truly desperate people will not just turn to crime, but might take (in Tammy Keel’s immortal words) a sack lunch and a Mauser to the roof of a tall building, in the ultimate expression of nihilistic fatalism and despair.
And I wonder too how many people right now are being held back from doing so by having just the faint hope of that little lottery ticket in their pocket.
Dropping a couple bucks on the lottery here and there for fun is fine. The problem is the people who drop tons of money into constantly because they are sure that they will win; amd yes they exist (much overlap with the people who drop every dime they have at casinos.
If you buy a $2 ticket and treat it as “entertainment”, you have the time taken to purchase, the time spent imagining what you’d do with the winnings, the time taken to look up the winning numbers and compare to your ticket, and the time spent going “oh well, maybe next week” which all probably adds up to roughly an hour? So $2 for an hour’s entertainment is actually a decent bargain.
If you call it a tax on stupid, then not so much.
I buy in only when the pot’s over 100M. The real payout is the drifting-to-sleep planning – assembling the team to help collect it and hold it with minimum shavings to the govt, and, a little bit, how to spend it.
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Yes, treat lotteries as entertainment.
BTW on this side of the pond if you win £100M you keep £100M; tax is paid on the ticket, not the winnings. The government still wins, of course.
100 million paid out over (IIRC) 30 years is roughly 3 million a year. Subtract taxes and you’ll have what, 1.8 to 2m. For 30 years.
Take 26 million dollars, and invest it *wisely* and you can get at least 1.3m a year *forever*, while investing the additional returns such that that 1.3 keeps up with inflation.
Now, you COULD arrange it such that you’re investing large parts of that 1.8 to 2m every year, so when the lotto money runs out you’ve got savings. But will you?
When the pot gets large then I also pick up a Ticket because someone does eventually win and without a ticket the chance that it might be me is truly zero, but with a ticket it’s possible. The entertainment value is worth the small fee. The more expensive tickets are not worth the entertainment value, despite the new large banner of my local lottery vendor proclaiming that they sold a “Million $ a year for life ” Ticket to someone who was not me for $ 20.
The only time I’ve ever put a dime into a lottery ticket was the engineering/drafting pool at work, and that was usually only for the over-hundred-million prize. We end up with 30 or 40 tickets, and one of them would occasionally pay off with a $10 or $20 winner, which went into the next pot.
The ONLY reason I did this was that if a miracle were to occur and my co-workers were going to split $100,000,000 30 or 40 ways I did NOT want to be the only one sitting in the cube-farm trying to answer all of those phones…