Playing the Lottery Is a Bad Gamble

by Aaron Crowe on 2 April 2012 4 comments
Photo: Magnus D

Whenever a big lottery payout is available, it seems like everyone you talk to is suddenly fantasizing about what they'll do with the money and wants to tell you about it. It's almost as boring as hearing about someone's fantasy baseball team.

"You can't win if you don't play" and "someone has to win" are two of the cliches I've heard recently from giddy gamblers at the grocery store checkout line. Non-gamblers trying to buy a six-pack of beer must be having a long wait at their neighborhood liquor stores as every passerby with a spare dollar stops in for a chance at being a millionaire many times over.

Yet get them talking about the lottery, and despite the crazy odds against winning (you're more likely to get into a deadly accident), they'll happily fantasize about how they'll quit their jobs and spend their winnings living the lush life they've always dreamed about. They'll talk your ear off if you let them. I used to work with a guy who talked about his post-winning plans nonstop, and it got boring fast. (See also: How to Win the Lottery Without Paying a Penny for the Ticket)

Day-dreaming and a little talk of fantasy can be a good thing, but combine it with spending hard-earned money each week gambling on a game that doesn't pay off that well, and you might as well be throwing your money away. Unless you find joy in handing over your money to a liquor store clerk so you can dream for a few hours about the vacations you'll take, your money will do a lot more work for you if you contribute to simple investments regularly.

The odds of winning the recent Mega Millions lottery and its jackpot of more than half a billion dollars were about 1 in 175 million. The chances of a pedestrian being hit and killed by a car are 1 in 588 in a lifetime. You're also more likely to drown in a swimming pool (1 in 6,711) or the big favorite — be struck by lightning (1 in 55,578).

But the long odds are just one of the reasons why playing the lottery is stupid. Despite the big prize of millions of dollars, the payouts are a lot less per dollar than you'd get in a casino. For entertainment value alone, gambling at a grocery store has to be a lot less exciting than Las Vegas or your local Indian casino. And like all gambling, there's the false hope that you'll walk out a winner and the letdown when you don't.

ARTICLE CONTINUES BELOW

If you've played the simple game of bingo for money, you know how fast your money can disappear. I tried to use it as a lesson to my 7-year-old daughter recently when we had a few hours to spend on a leisurely breakfast before going to a family event. We were in a state that allows payout bingo games at restaurants, and while it's illegal for children to play the game, my daughter was excited about playing, and the waitress looked the other way while my daughter played a few rounds.

I told her I would spend $5 for us to play two games of bingo, but when that money was gone, we'd either take our winnings and leave or quit anyway because our gambling money was gone. Each game lasted less than five minutes, and when our cards didn't win and our two games were done, she of course asked what every kid asks when the fun ends — "Can we play one more time?"

Sometimes I give in as a parent, though I know it's not a great lesson. But this time I didn't, partly because I didn't want to throw away another $5 bill, but mainly because I wanted her to realize how fast money can leave your fingers if you let it. She gets about $5 each week in allowance for doing chores, and a week's worth of work was gone in minutes with nothing to show for it except a few old bingo cards.

I don't know what the payout amount was for the bingo games we played, since some of the money was going to a charity. State-run lotteries have the worst odds and lowest paybacks of any legal form of gambling, according to a Bloomberg story. Georgia has the most suckers, spending an average of $470.73 on the lottery in 2010, or 1% of their personal income, while getting back 63 cents in prize payouts for every dollar they spent playing.

Roulette is heavily favored toward the casino, but even at the worst odds of 37 to 1 of hitting a single number, the payout is 35 to 1. Whether you win or lose, the house always wins. It's the same with playing the state lottery, which unfortunately is a lot easier to do than taking a trip to Las Vegas.

0
No votes yet
Your rating: None
ShareThis

comments

4 discussions

Add New Comment

CAPTCHA
This test helps prevent automated spam submissions.
Tara Struyk's picture

I think it's OK to spend a few bucks on a fantasy, but I literally see people paying $10, $15, $25 or $100 to buy tickets for big jackpots like this. If they invested that money, they'd have a guaranteed jackpot to collect when they retire!

Guest's picture
Guest

What's your take on people handing over hard earned $$ to a movie theater for a couple hours of mindless fantasy film? Is it worth the $15 for 2 hours of fantasy?
You gotta loosen up man and let people find an escape from reality once in a while, if only for a fantasy world for an hour or two.

Guest's picture
Guest

I agree. An occasional dollar or two is worth the entertainment value, and it gives me a chance to see how my fantasy goals line up with my real-life goals.

Guest's picture
juggler314

It's interesting to note that once the lottery is large enough *statistically* it is a good wager. For the mega millions that number is somewhere around 280 million. What I mean by this is the "expected value" of your ticket is greater than $1 at that point. And what that means is that if you were to play the lottery millions and millions of times, you'd expect to get back more than the money you put in. Of course at just 2 drawings/week you could never play that many times...

It's still a hell of a longshot, but mathematically there's a tipping point where it's a realistic "waste" of a dollar or two.

As a comparison in a simple game - say roulette, betting a single number pays 35-1, but there are 37 numbers - so the expected value of a dollar is 35/37 - play 37000 times and you'd likely end up with 35000 out of your originally bet 37000 dollars.

Personally I can afford to play if I want, but I've probably only bought lotto tix maybe 6 times in the past decade. There's a reason they call the lottery a tax on poor people.