Lowest earners waste more money on lotteries
State-run lotteries are tantalizing, dangling carrots for many consumers in the economic downturn. After all, who can’t afford to lose a buck or two a week? And if it pays off, all problems are solved. But is it a smart way to spend money in a time when money is not that easy to come by? According to the recently-released Bloomberg Sucker Index, the answer is a resounding no.
Most common form of gambling
The study was created using data from the U.S. Census Bureau’s report of state lottery commissions. Prize amounts were subtracted from sales revenue and the difference was divided by the average income of residents in that state. Bloomberg Rankings concluded that state-run lotteries are the most-played form of gambling in the nation, as well as having “the worst odds” of paying off.
Sobering fact: According to Daily Finance, the chance of winning the California Super Lotto Jackpot is about 1 in 18 million.
Breaking even is not an option
The Sucker Index concluded that the average payout, over time, for regular players of the lottery is only 60 cents on the dollar. In Louisiana, you can only expect a 51 percent return. The highest in the nation is Massachusetts, at 72 cents back for every dollar spent. For the average player, breaking even is not even an option, much less getting ahead.
Georgians top suckers
The lottery-playing citizens of Georgia were given the dubious distinction of being the number one suckers in the land. Denizens of the Peach State forked out $3.4 billion for lottery tickets in the last 12 months. That averages out to about $470.73 for every adult, or one percent of their annual incomes.
The State of Georgia earmarks lottery revenue for educational scholarships and to fund preschools. Those institutions benefit middle- and upper-class families more so than the low-income consumers who purchase the lion’s share of the tickets.
Charles Clotfelter, an economics professor at Duke University, said:
“You’re taking from those with few means and helping those with more means … To link that tax revenue to a benefit that goes largely to middle- and upper-class citizens is a little stunning.”
Suckers of the North
Massachusetts scored second place on the index. It was ranked below Georgia only by virtue of its higher-than-average payout-per-dollar ratio.The average resident in Massachusetts plays the lottery more often than in any other state. Enough, in fact, that the typical adult spends 1.3 percent of his or her yearly income on the seductive tickets.
New York fell into the third spot, trailed by Michigan and South Carolina. Oklahoma, Washington, South Dakota, Montana and North Dakota were the states with the fewest suckers at the bottom the list.
Two weeks to the poor house
Daily Finance broke it down like this: Say you have $1,000 to “invest” in lottery tickets, and decide to spend any winnings on more lottery tickets to increase your chances at a big jackpot. At a 60 percent return, the fist day’s winnings equal $600. That gets reinvested, for a 60 percent return of $360. After two weeks are over, this investment strategy has left you with a total of 78 cents.
Seven states do not have lotteries. They are Alabama, Alaska, Hawaii, Mississippi, Utah, Wyoming and, ironically, Nevada.