Why I’m playing the lottery

By Felix Salmon
March 20, 2012

Have you bought your lottery ticket yet? The jackpot’s up to $241 million!

An interesting thing happens, when the jackpot gets this big: if you actually believe the $241 million figure, the expected return on your dollar is positive. The mean player, it turns out, is going to get paid out to the tune of $1.553 for every ticket they buy. In reality, sadly, the cash option is $170 million, which brings the expected payout to $1.149 per dollar spent, which means that after taxes, you still have to expect to lose money.

But all of that is moot: realistically, your chance of winning the jackpot is zero. Technically, it’s one in 175,711,536, or 0.000000569%. Which is statistically the same as zero. But it’s not psychologically the same as zero — and that’s what counts. When you buy your lottery ticket, it’s impossible not to dream of all the things which might happen if you won. (My dream now has to include the inconvenient fact that my winning lottery numbers will have been broadcast on YouTube.) The dream is pleasant enough to be worth a buck — at least to someone with a buck to spare, like me. In fact, it’s so pleasant that sometimes I won’t even check my lottery numbers, because I don’t like the opposite feeling of finding out I haven’t won.

And the occasional wager on the lottery is a lot less expensive, and a lot less damaging, than attempts to get rich quick in the stock market.

Which doesn’t mean there isn’t a dark side to the lottery — there is. It’s a horribly regressive tax on poverty, for one thing. I’m one of those people who think that they should be paying more in taxes, and by far the easiest way to funnel more of your income back to the government is to buy lottery tickets. It really is a voluntary tax. But the problem is that it’s paid overwhelmingly by poor people who can’t afford it, rather than by rich people like me who can.

And if you move from lottery tickets to scratch cards, something else happens — they pay out with enough predictability that they can actually be used for money laundering. Take your dirty dollars, buy a bunch of scratch cards, redeem the winners, and you’ve got nice clean legitimate money. If the games weren’t so incredibly lucrative for the states, they’d be made illegal in no time just for this reason alone.

So from a public-policy standpoint, lotteries are a bad idea. Assuming that they’re here for the foreseeable future, however, I’m going to continue to buy myself a ticket now and again, if I ever find myself in a place selling lottery tickets when the jackpot goes above $200 million. I’m doing myself no harm, I’m doing the state and the vendor a little bit of good, and hey, you never know. This blog could turn into the diary of a lottery winner.

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