My newest book features a large section of the Worst Things on Which We Waste Our Money. In that section, there is an Honorable Mention category, wherein “Gambling” is discussed and I establish that your worst odds are found in the various Lottery games.
Before we look at a few lottery winners let’s take a quick look at the odds of common games of chance. If you play 21 in Vegas, the house keeps 3-15% of your money, depending on your skill level. If you happen to count cards and can tell when the remaining deck is ten-heavy (cards that are valued at 10 points), you can cut the house’s advantage a bit. Good players also learn when to double down and split cards. It is especially useful to develop money management techniques, like bet heavier in winning streaks and cut back when the gambling Gods are being fickle.
Other games offer similar odds. For example, most people can reduce the house’s advantage at Craps to below 2% without much trouble. Roulette, slots, KENO and sporting events offer you slightly worse odds, ranging between 5% and 17% Overall the house has an edge on everybody who is not cheating. The government sends all sorts of agents to make sure the evil Casinos don’t take advantage of the public’s collective stupidity.
Predictably, when it comes to government run lotteries, the government does not hold themselves to the same standards as they hold casinos. In fact, it is not even close.
The Colorado lottery is similar to most others in that regard. Our “generous” government only keeps 50% of all lottery money. I find that fascinating. In order to protect an innocent public, they forbid casinos to keep more than 17%, but the same State Government guarantees themselves nearly three-times as much. It is no wonder people scoff when they hear, “Hi, I am from the Government and I am here to help you.”
This means that every time they pay out a million-dollar jackpot, they keep a like amount for themselves. In essence they steal half of the pot. In order to make those payouts, there are over two-million people who had to lose a dollar: one-million people donated a dollar to the winner and another million people paid the state their million.
The officials like to tell us they put their money back into parks and other public programs, and indeed they do make a few token gestures to make it seem like they are on the up and up, but only a fool would believe that the public gets their money’s worth. A great deal of the public’s share is peeled off for “administrative costs”, so the lottery is really just another way to create more Government jobs.
But wait, it gets worse. If you happen to be the “lucky winner”, you must pay a hefty tax on your winnings. Depending on the size of your jackpot, the Feds keep up to 36% of your winnings, and the State (Remember them? They run the whole thing) grabs another 5% as state income taxes.
Anybody who understands the hopelessness of the matter would certainly curtail the amount of money they spend in this way. Most educated people “get it” and some of them buy tickets anyway. I do not criticize them because they basically understand the details and can afford to flush a dollar occasionally. But the real monster in this equation is the State itself because it preys on the ignorance of the public.
Very often, the people who can least afford lottery tickets are the ones who actually buy them. Half of the weekly players have annual household income under $35,000. Many of these people hear lottery success stories and fall victim to the excitement without really realizing that their chances of winning are ridiculously small. They naively use money that ought to go to food and shelter to buy a shot at wealth.
Even if these people do win the lottery, it usually makes their lives worse. Evelyn Adams is a classic example. She actually won two major jackpots in New Jersey, totaling well over Five-Million dollars. But she had no idea how to handle her money and went broke within a few years. Her friends and family all thought she was an endless fountain of money and she did not have the will power to tell them, “No”. Within a few years she was broke and ended back in a trailer court, probably buying more lottery tickets.
Bill Post of Pennsylvania hit a doozey of a lottery pot: Coming in at over $16 million. He too went broke. A girl friend sued him because she said she owned part of the winning ticket. His brother tried to have him killed. Other people also sued him. Eventually, he lost it all and now lives on social security. He admits that the whole thing made him miserable and he wishes he had never won it in the first place.
Janet Lee won 18-million and suddenly found out she had lots of new friends and power. She donated money to anybody who asked, and eight years later, she had to file for bankruptcy.
These people are not rare. In fact 75% of winners go broke within 5 years. They do not really understand what they have, so they do not know how to keep it. One of the best things they could do is restrict themselves to living on the interest that their money can earn. If a person has a million dollars and can get a 5% return,that amounts to $50,000 per year in income. Once again, they have to pay taxes on that income, so they will have something like $38,000 per year left over. That is a tidy sum, but not an infinite amount of money. Once they start digging into the principal, they are doomed to spend it all.
With 47 numbers, your chance of picking 6 correctly is one in fourteen million. To get an idea of how daunting that is, imagine a line of fourteen million people standing back to back. That line would be 6,629 miles long. That is like driving from New York to San Diego and back again. It would take you at least a week just to drive past all 14 million people. Imagine how likely it would be to guess which person in that group would have the winning ticket.
So, your odds of winning are astronomically low and the government steals the majority of the money: the state confiscates half the money before they payout any winnings, and then the winners have to forfeit half of the jackpot in the form of income taxes; furthermore, the majority of winners end up frustrated and worse off anyway.”
Once you understand the numbers and what happens to people who actually do win, it is clear that buying lottery tickets is a voluntary act of stupidity. Those poor people are the types who also believe the common lie, “Hi, I am from the Government and I am here to help you.” That is why I say, “Gambling, and especially the lottery, is one of the Worst Things on Which We Waste Our Money.”
Come back soon and don’t forget to check out my Human Interest blog.
Before we look at a few lottery winners let’s take a quick look at the odds of common games of chance. If you play 21 in Vegas, the house keeps 3-15% of your money, depending on your skill level. If you happen to count cards and can tell when the remaining deck is ten-heavy (cards that are valued at 10 points), you can cut the house’s advantage a bit. Good players also learn when to double down and split cards. It is especially useful to develop money management techniques, like bet heavier in winning streaks and cut back when the gambling Gods are being fickle.
Other games offer similar odds. For example, most people can reduce the house’s advantage at Craps to below 2% without much trouble. Roulette, slots, KENO and sporting events offer you slightly worse odds, ranging between 5% and 17% Overall the house has an edge on everybody who is not cheating. The government sends all sorts of agents to make sure the evil Casinos don’t take advantage of the public’s collective stupidity.
Predictably, when it comes to government run lotteries, the government does not hold themselves to the same standards as they hold casinos. In fact, it is not even close.
The Colorado lottery is similar to most others in that regard. Our “generous” government only keeps 50% of all lottery money. I find that fascinating. In order to protect an innocent public, they forbid casinos to keep more than 17%, but the same State Government guarantees themselves nearly three-times as much. It is no wonder people scoff when they hear, “Hi, I am from the Government and I am here to help you.”
This means that every time they pay out a million-dollar jackpot, they keep a like amount for themselves. In essence they steal half of the pot. In order to make those payouts, there are over two-million people who had to lose a dollar: one-million people donated a dollar to the winner and another million people paid the state their million.
The officials like to tell us they put their money back into parks and other public programs, and indeed they do make a few token gestures to make it seem like they are on the up and up, but only a fool would believe that the public gets their money’s worth. A great deal of the public’s share is peeled off for “administrative costs”, so the lottery is really just another way to create more Government jobs.
But wait, it gets worse. If you happen to be the “lucky winner”, you must pay a hefty tax on your winnings. Depending on the size of your jackpot, the Feds keep up to 36% of your winnings, and the State (Remember them? They run the whole thing) grabs another 5% as state income taxes.
Anybody who understands the hopelessness of the matter would certainly curtail the amount of money they spend in this way. Most educated people “get it” and some of them buy tickets anyway. I do not criticize them because they basically understand the details and can afford to flush a dollar occasionally. But the real monster in this equation is the State itself because it preys on the ignorance of the public.
Very often, the people who can least afford lottery tickets are the ones who actually buy them. Half of the weekly players have annual household income under $35,000. Many of these people hear lottery success stories and fall victim to the excitement without really realizing that their chances of winning are ridiculously small. They naively use money that ought to go to food and shelter to buy a shot at wealth.
Even if these people do win the lottery, it usually makes their lives worse. Evelyn Adams is a classic example. She actually won two major jackpots in New Jersey, totaling well over Five-Million dollars. But she had no idea how to handle her money and went broke within a few years. Her friends and family all thought she was an endless fountain of money and she did not have the will power to tell them, “No”. Within a few years she was broke and ended back in a trailer court, probably buying more lottery tickets.
Bill Post of Pennsylvania hit a doozey of a lottery pot: Coming in at over $16 million. He too went broke. A girl friend sued him because she said she owned part of the winning ticket. His brother tried to have him killed. Other people also sued him. Eventually, he lost it all and now lives on social security. He admits that the whole thing made him miserable and he wishes he had never won it in the first place.
Janet Lee won 18-million and suddenly found out she had lots of new friends and power. She donated money to anybody who asked, and eight years later, she had to file for bankruptcy.
These people are not rare. In fact 75% of winners go broke within 5 years. They do not really understand what they have, so they do not know how to keep it. One of the best things they could do is restrict themselves to living on the interest that their money can earn. If a person has a million dollars and can get a 5% return,that amounts to $50,000 per year in income. Once again, they have to pay taxes on that income, so they will have something like $38,000 per year left over. That is a tidy sum, but not an infinite amount of money. Once they start digging into the principal, they are doomed to spend it all.
With 47 numbers, your chance of picking 6 correctly is one in fourteen million. To get an idea of how daunting that is, imagine a line of fourteen million people standing back to back. That line would be 6,629 miles long. That is like driving from New York to San Diego and back again. It would take you at least a week just to drive past all 14 million people. Imagine how likely it would be to guess which person in that group would have the winning ticket.
So, your odds of winning are astronomically low and the government steals the majority of the money: the state confiscates half the money before they payout any winnings, and then the winners have to forfeit half of the jackpot in the form of income taxes; furthermore, the majority of winners end up frustrated and worse off anyway.”
Once you understand the numbers and what happens to people who actually do win, it is clear that buying lottery tickets is a voluntary act of stupidity. Those poor people are the types who also believe the common lie, “Hi, I am from the Government and I am here to help you.” That is why I say, “Gambling, and especially the lottery, is one of the Worst Things on Which We Waste Our Money.”
Come back soon and don’t forget to check out my Human Interest blog.
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