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Lottomania: Mega Millions Madness

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The government lotto hucksters are at it again, hoping to exploit our ignorance and cultivate our superstitions, this time with another blockbuster Powerball lottery, set at a mind-numbing half a billion dollars. Nothing beats the numbers game to separate our money from our wallets, but why are our governments so keen to encourage gambling in our lives?

The numbers are staggering at more than $100 billion spent annually worldwide, an increase of more than 10% from last year with little thought to the social impact. “Imagining the freedom” has never been so popular. Total American gaming revenue is more than $100 billion per year, a 50% increase since 2000. What’s more, 30% of adults visit a casino each year, 1% of whom are considered “pathological gamblers” according to the American Gaming Association.

Winning, however, is still unlikely, no different from La Lotto de Firenze in 1530, the first lottery to use money for prizes. In fact, the chance of winning a six-ball, 49-number lottery is about 14 million to 1, or 6 times less likely than being struck by lightning, according to J. Laurie Snell, former Dartmouth professor of mathematics and numbers oracle atChance News, a web-based statistics forum. A program of lesser prizes attempts to offset the bad odds, where “winning” includes a 4-to-1 chance to win another ticket and so on.

Many trumpet the Irish Hospitals Sweepstakes as the first modern lottery, offering payouts based on horse finishes, but the electronic clamoring for today’s millions really began in New Hampshire with microchips and secure telephone lines. A revamped American Dream, posting multimillion dollar prizes Monday to Sunday of every week, has done the rest.

The lottery wasn’t always so bold. Banished by the United States Supreme Court for 70 years because of a “demoralizing influence upon the people”, New Hampshire (1964), New York (1967), and New Jersey (1969) cautiously started the ball dropping again. Little debate has since ensued over any negative influence.

Though as much as half of all sales revenue is given back to “players,” as lotteries dub the ticket-buying population, governments take enormous pride in how they spend theirwindfall, as if justifying the lottery through their philanthropy, which of course could just as easily be raised by other taxes. Using lotteries to fund public works is nothing new. Lotteries helped finance such landmark buildings as the British Museum and the Sydney Opera House.

The Continental Congress voted to establish a lottery to raise funds for the American Revolution, although the scheme was soon abandoned. Other public works programs are more imaginative—in Kansas, 10% of lottery money is put aside for prisons, whereas in Nebraska, a percentage of lottery revenue was once spent on a solid-waste landfill fund. A far cry from Louis XIV, who had his own ideas about lotto funds after he and his ministers won top prize in his rigged state lottery.

Each year, government spend billions telling us how to “imagine the freedom,” “live dangerously,” “take the plunge,” and “escape the jungle for an instant,” trying to make the lottery as popular as possible. In Ontario, after returning 7% for retailer commissions, the remaining 13% of each lotto dollar goes to operating costs, including 1.6% for advertising. In New Hampshire, the $1 fork-over was even simplified to two best-selling scratch tickets called “One of These” and “One of Those.” Their latest marketing brainstorm comes in a new bacon-scented ticket.

Scented or not, the prize money is no peanuts. The bi-weekly Powerball lottery is often around a half-billion dollars, though the biggest lottery payout to date is $656 million, won in a U.S. Mega Millions draw. Elsewhere, prize winnings regularly top the multimillion-dollar mark. Spain’s Christmas lottery, dubbed El Gordo (The Fat One), was a record €2.5 billion last year, although split among thousands. Few seem to question the value of giving away millions for nothing.

“Systems” abound and are especially designed to separate one’s dollar from one’s pocket. Most are based on random numbers, past performance, or the usual appetite for numerology and lucky numbers, where number 7 is everyone’s favorite—although lucky number 7 is no luckier than unlucky number 13 when it comes to life and lottery balls. Random number systems have as much chance as any homespun system, such as picking birthdays or wedding dates. Typically based on past “performance,” such systems compile results from a wealth of frequency data to show what’s “hot” and what’s not.

Past-performance systems prey on those who don’t understand the most basic laws of chance. In the 5/59-plus-bonus ball Powerball USA game, number 54 is currently “hottest,” popping up on 11% of draws in the past 3 years. The “coldest” is number 21, falling on only 5.3% of the same tickets. Should one stay with “hot” number 54 or dump it in favor of “overdue” number 21? Sadly, many who subscribe to their own ideas about the law of averages think that number 21 is ripe for the picking, but it makes as much sense to stick with “hot” number 54 if it’s that hot. In theory, hot 54 and cold 21 should pop up about 8.5% of the time or once in every 12 draws.

Not only clubs but organized syndicates exist to beat the odds, perhaps winning up to a third of all draws. Payouts come in bunches, as favorite numbers are “boxed” in multiple combinations. “Wheeling” is the jargon of the serious lotto gambler. But wheeled or not, one ticket is just as likely—or unlikely—to win as any other. If at all reputable, syndicates are for the more seasoned suckers of the lottery sham.

In Italy, video lottery terminals have taken over. Elisabetta Povoledo noted there was one VLT for almost every 100 inhabitants in one Lombardy town, and are to blame for “an increase in bankruptcies, depression, domestic violence and broken homes (“Fears of Social Breakdown as Gambling Explodes in Italy,” New York Times, December 13, 2013). Since the advent of relaxed gaming regulations, Italy has become the fourth-largest gambling market in the world, behind the U. S., Japan, and Macau. One in eight dollars is spent on gaming. Clearly, the government is just as hooked on the revenue.

To be sure, state-sponsored lotteries are a regressive tax. “A tax on the poor,” Manitoba MLA Jim Maloway stated in the legislature in response to the increasing number of video lottery terminals in his province. Maloway questions the propriety of government involvement in such lottery schemes: “What we have done is basically legalize and organize another vice by doing this with gambling. The fact of the matter is that it is here, but the whole fiscal image, the whole fiscal position of the government rests largely on this gambling revenue that they have managed to put aside for the last couple of years.”

In State Lotteries: Advocating a Social Ill for the Social Good, Michael Heberling further noted that when the money-raising euphoria wears off, coercive action is needed to keep up the revenues, slyly referred to as a “voluntary tax.” As such, governments end up raising taxes, increasing the number of ads, and “devising new, more exciting (and addictive) versions of the game.” Bacon smell? Furthermore, lottery spending is greater for poorer income groups – those earning less than $10,000 per year spend at least $500 per year on the lottery – and, thus, lottery ads are targeted specifically at the poor.

One can also argue that government-run lotteries should not be sold as tantalizing entertainment. “Scratch and lose” should be their catchy slogan, informing us of the unlikely event of winning, not encouraging use with seductive techniques. Of course, if a lottery is essential to keep the numbers rackets and organized crime out, why not a simple lottery with smaller and more modest payouts? Or is it all just Money Madness?

So what can we do to protect ourselves and those who don’t seem to know better? Given the lack of government action, the only appropriate course is not to play. The informed consumer should know that there is no such thing as a free lunch and not to trust the man in the suit selling success. He is a shill.

At the very least, there should be a disclaimer on each ticket, not unlike on cigarette packages: “Playing lotteries decreases your chances of saving” or “Player not likely to win in 10,000 lifetimes.”

JOHN K. WHITE, an adjunct lecturer in the School of Physics, University College Dublin, and author of Do The Math!: On Growth, Greed, and Strategic Thinking (Sage, 2013).Do The Math! is also available in a Kindle edition. He can be reached at: john.white@ucd.ie.

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John K. White, an adjunct lecturer in the School of Physics, University College Dublin, and author of Do The Math!: On Growth, Greed, and Strategic Thinking (Sage, 2013). Do The Math! is also available in a Kindle edition. He can be reached at: john.white@ucd.ie.

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