Why Is Playing the Lottery A Waste of Money?
Thu, April 22, 2021

Why Is Playing the Lottery A Waste of Money?

 

Do you love playing the lottery because you are captivated by the idea of instant riches? Playing the lottery may make even the most rational individual pool their hard-earned money into lottery tickets.

The prospect of instant riches — no matter how slim your chances are of winning — may impair your ability to weigh the pros and cons. There are many reasons why people are discouraged from playing the lottery, encouraging them to create a more intentional or feasible plan for their money.  

Surveys Illuminate the Gambling Industry and Thoughts On Winning the Lottery

In a survey by the Gambling Commission, an executive non-departmental public body of the UK government, 29% of respondents said it would be better if gambling was banned altogether, up from December 2018’s 25%, as stated in the department’s “Behavior, Awareness, and Attitudes” report. 82% believed there are too many opportunities to gamble nowadays.

The National Lottery was the most popular form of gambling, as 30% of respondents played it. 12% played other lotteries while 10% played scratch cards. The most popular sources of information about gambling were television news (40%), personal experience (31%), newspapers (26%), and online news (25%). Meanwhile, 87% of respondents had seen or heard gambling advertising or sponsorship and of those, 51% had seen these ads on television, 31% on non-gambling websites, 30% on social media, 18% on radio, and 23% in newspapers.  

According to a 2015 annual lottery survey conducted by online lottery pool Lotto Lishus and Holos Research, they found that 77.99% of respondents would not give up their spouse/romantic partner for any lottery jackpot. Other respondents would give up their partners if they won $10,000 or less (3.59%), $100,000 (1.91%), $1 million (1.44%), $10 million (5.74%), and $100 million or more.

Likewise, 66.51% would not give up their pet for any lottery jackpot. However, some respondents were willing to give up their pet if they won $10,000 or less (6.94%), $100,000 (5.26%), $1 million (5.50%), $10 million (9.09%), $100 million or more (6.70%). When asked what they would most want to happen, the participants answered “to win a large lottery jackpot” (58.37%), “to become famous” (3.35%), and “to find the love of my life” (38.28%).

When asked what they would most likely to do first if they won a $100 million lottery jackpot, they planned to “invest half of it” (61%), quit their job (24.88%), give money to the homeless (12.20%), and roll around naked in hundred dollar bills (1.91%). When asked what they would be most likely to do if they found a winning lottery ticket on the street, the respondents said they would destroy it (1.91%), try to find the owner (33.01%), and keep it for themselves (65.07%). 44.50% said they would most likely keep it a secret if they discovered a way to play the lottery for free, while 55.50% would tell their friends. 70.10% believed money cannot buy happiness compared to 29.90% who believed it could.

 

 

Why Is Playing the Lottery A Waste of Money?

1.      Slim Chances of Winning

Are you aiming to nab that billion-dollar Mega Millions jackpot? Think again. If you want to give it a try, you have one in 300 million chances of winning. You may know a loved one or an acquaintance who won the lottery.  However, have you considered how much they spent on lottery tickets? Let’s say your relative won $50,000 in the state lottery. Maybe they spent less than $50,000 or more. When thinking about hitting the jackpot, you need to consider the amount of money you will spend on buying lottery tickets.

From a mathematical perspective, lottery is a great example of expected value, in which it combines the probabilities and prize values to help us assess the game’s sense of value, explained Andy Kiersz of Business Insider, a fast-growing business site. In Mega Millions, for example, you get to choose five numbers from one to 70 and one from one to 25 for each $2 ticket your purchase.

Your prizes will be determined by how many of your chosen numbers match those drawn the game. Take each prize, ranging from $0 to $1,600,000,000, and subtract the price of the ticket. Multiply the net return by the probability. While it makes sense for you to buy a ticket, you should also take into account the other awry aspects of lottery.

2.      Encouraging Gambling Habits

Lottery is a form of gambling and may turn into an addiction. Although this may not turn you into a hardcore gambler, you should exercise self-awareness if you think you are too consumed of trying to hit the jackpot.

 


3.      Taxes

State income taxes vary, but it is possible that combined state, federal, and local taxes (in some jurisdictions) could take as much as half of your winnings. Now, if you are taking home half of your money, the expected value calculations become negative (-$0.26) after taking the lump sum, suggesting that buying a ticket is a bad investment.

4.      Multiple Jackpot Winners

Winner takes all? Not really. There’s a possibility of multiple people winning the jackpot. Bigger pots, particularly that attract media, tend to lure more customers. As more people buy tickets, the greater chance that you and two or more customers will choose the magic numbers, splitting the prize equally among all winners.

Calculating the ticket’s expected value is tricky as it depends on the number of tickets sold, which would not be disclosed until after the numbers are drawn. Even if a bigger jackpot entails a better-expected value of a ticket, it could draw in too many players—damaging a ticket’s expected value and increasing the likelihood of a split jackpot.

What Should You Do Instead of Playing the Lottery?

You can invest in stocks or real estate. Another alternative is to open a high-yield savings account. This can increase your savings balance, but the rate of growth could be less than investing in the stock market. You can also start a side hustle or a small business. It may be risky, but you are more likely to have a successful business than winning the lottery. If you have the skills, you can create a profile and connect with potential paying clients. Compared to a lottery, it could take many years to win.  

It is up to you whether you want to continue playing the lottery despite the above-mentioned risks. Consider talking to a professional if you think you are addicted to lottery and other forms of gambling. Most of all, it is recommended to assess how much money you are spending on lottery tickets.