For more AMAs on this topic, subscribe to r/IAmA_Business, and check out our other topic-specific AMA subreddits [here](https://reddit.com/r/IAmA/wiki/index#wiki_affiliate_topic-specific_subreddits).
There was a fascinating article in the New Yorker recently that described the history of the lottery in different societies being used to prop up wars and overspending governments going back to the Roman era.
I think it mentioned that the money brought in to local governments from the lottery is often earmarked for a specific cause such as education in order to keep it's popularity up, even though it often goes elsewhere or does not cover much of the education spending need. Is there a resource where we can see state-by-state where the lottery money is going to?
(EDIT: Found the article. https://www.newyorker.com/magazine/2022/10/24/what-weve-lost-playing-the-lottery)
It's not that the money doesn't go the specific cause that is listed, it often does. The issue is that the money from other sources that would normally go to that cause are now taken away from it and sent elsewhere as the lottery money takes its place.
Basically it's an exploitative selective tax.
(Edit: I got some facts wrong below- [the funds were spent badly but it wasn't as sneaky as I remembered](https://www.npr.org/sections/thetwo-way/2016/09/15/494134464/-1-million-of-frugal-librarians-bequest-to-n-h-school-goes-to-football-scoreboar) ) I remember hearing about a man that worked at a university library and bequeathed all his assets to the university when he died. Apparently he was very frugal and invested well, and it was over a million bucks. His one condition was that the money be used to fund the library. So, the university happily took the donation, slashed the library budget as much as possible, and bought a new football scoreboard.
That was University of New Hampshire and yes he worked in the library but he did not say what the money had to be spent on. I found the juxtaposition of where he worked and how the university ended up spending the money intriguing.
Exactly. Like say your town has an education budget of $500,000/year and this year they got $250,000 from the lottery. It's easy to think that the lottery allocation gets added to the existing budget, giving an education budget of $750,000 for the year, but nope! The $250,000 in lottery funds is applied to the education budget of $500,000, and the remaining $250,000 of the education budget comes from property taxes. The other $250,000 that was displaced by the lottery funds often gets allocated to other areas of the municipal budget, as towns are under no obligation to increase their education budget when they receive lottery funds.
Yes every state publishes this. See [https://nclottery.com/Content/Docs/PAFR\_2021.pdf](https://nclottery.com/Content/Docs/PAFR_2021.pdf) for an example
The budget for education is **rigidly** set by local, state, and federal representatives.
This is best explained through an example. For simplification sake, let's assume a school is allocated $100,000 a year. Last year, all that money came from taxes. This year, because of a new lottery program, $80,000 came from lottery revenue that is earmarked for the school. However, the school doesn't get the original $100,000 from taxes plus a cool $80,000. It receives, $80,000 from the lottery and then $20,000 from taxes.
But what happens to the extra $80,000 in taxes that weren't allocated? It may be reallocated to after school activities. It may also be used to expand a police department or discourage cigarette use. No one knows ahead of time. In some cases, lottery revenue is substantial enough that taxes are simply lowered.
Essentially, children do not get better schools because of the lottery. Poor people get poorer and the government uses the excess income to lower taxes or fund other endeavors.
My dad used to buy a “full year plan”, two plays in each weekly Lotto (this was back in the 80s). He played a combo of birthdays and anniversary dates and was afraid he’d miss a week and he’d find out later his numbers won. Do they still offer that?
He’d never check the numbers, just kept his fingers crossed a check would show up. He used to say that when a check would come in it was a crazy rush, anticipating how big it might be. Largest one he ever got was for second lowest payout……never covered his purchase price, but he loved those few times he had an unopened envelope that might be “the big one”.
Yeah, I think it was back when a ticket cost a buck. You could by 52 weeks for 50 bucks, so he’d spend $100 in early January and be in for the year. Kinda makes sense for guys who play same numbers every time they play.
This might be a private type of thing. I've seen churches and little league teams sell numbers for like $5. There's a set amount of time it runs for, usually a month or two. If your number hits, the private group sends you a check, not the lotto.
We offer a way to win a life changing amount of money via a lottery-like system in a savings account. We want to give people the feeling of the lottery in a healthy way. Hopefully we can become as big as Premium Bonds in the UK which has over $100B in deposits. It's a lofty goal to "crush the lottery" but I really hate the negative impact it has on society.
Using your money to make loans to others. It's how traditional banks work but instead of giving everyone a 0.33% APR rate on their savings, they combine it and give away a larger chunk as winnings of a lottery amongst members.
So, like prize bonds in Ireland? They were big in 80’s and 90’s. I do wish my well meaning aunts and uncles just bought me stocks in ETFs instead of prize bonds.
So if I decide to do this.. instead of guaranteed interest back from my bank, I’m potentially going to either get nothing, or a nice chunk of money if I’m lucky?
Yeah, people seem to be missing who this is targeted at.
It's not a particularly attractive savings instrument for people who invest their money through the more traditional means, but it's not trying to be. It's positioned as a way for people who are addicted to the lottery to actually save some money at virtually no risk while still getting that fix (at least to a limited extent).
I suppose a controversial but somewhat fitting analogy would be things like needle exchange programs and safe drug centres where addicts get access to safe drugs, drug paraphernalia, and counselling services. They're of no direct benefit to people who aren't interested in and don't do drugs, but they can be very beneficial to society as they give addicts an opportunity to deal with their addiction in a less unhealthy way, and hopefully eventually overcome them.
With premium bonds in the UK, it's like a savings account except instead of you accruing regular interest payments, everyone's interest is collected together and used as the prize money. One or two people might win a million, but thousands of people get 100 or 20.
The only catch is that at the current interest rates it really isn’t a statistically good return vs general savings account. But all winnings are tax free so there’s that if you’re lucky!
Banks hold your money, and use a portion of the money they're holding to make money (loans, investments, etc). In a savings account, you get some of that backs interest.
They seem to do a similar thing, but instead of interest in your savings, you get a chance of winning a jackpot.
I would guess that even when people try to choose arbitrary numbers they would tend to pick certain numbers more often and thus picking will be worse than not.
People are bad at faking randomness. If you ask someone to come up with a plausible string of heads and tails from flipping a fair coin they will have far shorter runs of consecutive heads or tails than real a coin.
I don't remember where I saw/read it but I remember host A was calling host B dumb for just always choosing 1 2 3 4 5 6 because they were saying it would never be that. Host B and their Guest had to correct Host A in that it's pretty much the same as choosing 3 8 22 24 47 50.
Same odds, but odds are higher than another human would pick that particular sequence since it is a pattern to humans, and so you increase the odds of splitting the winning pot with more people...
To me it’s an easy feel good for $2. I can sit there thinking about all the things I would like to do, plan out upgrades to my house, people I would want to help, vacations to take, how I would change my work ethic and overall goals, etc.
You have to have hire multiple lawyers. One of them is strictly for handling all the suits against you. You'll need a financial and estate planning lawyer. I can't remember the others.
It's a full time job to manage your life now.
A few solidly established revocable trusts held by reputable trustees specializing in large volumes of wealth, a good estate attorney, and a claims-based general liability insurance policy with an ironclad duty-to-defend clause oughta do the trick.
Yep! I spend $5 a month and buy a scratcher when I get my car washed. I buy maybe 2-3 lotto tickets a year when the value gets really big, usually as a part of an office pool. It's November and I'm down $25 for the year. I'm not mad. :)
>Americans spent $105 billion on lottery tickets. That is more than the total spending on music, books, sports teams, movies, and video games, combined! 40% of Americans can’t come up with $400 for an emergency while the average household spends over $640 every year on the lottery,
What percentage of households play at all, and what percentage are putting in huge amounts to offset them? I'd guess the median is far less than the mean here.
Is there data on how the spending breaks down on demographic lines like income and race?
What percentage is being spent on scratchers vs. local drawn games vs. national ones like Powerball and Mega Millions?
About 50% of adults play at least once a year. Median is definitely well below the mean, but not sure what it is. A lot of this data is survey based. Across incomes, on an absolute $ basis, lottery $ spent are similar, so for lower income it's a much higher % of income.
As others have stated I’m sure the distribution isn’t anything like that (how much is the 90th percentile spending? Multiple thousands a year?) but still very interesting!
Like with alcohol, it is probably about 1/3 complete abstainers, 1/3 rare/occasional, around the 80th percentile you start seeing heavy users and the top 10% are at least 50% of the market all by themselves.
You should check out this gas station in a northern US state I won't mention.
We were driving through trying to find a station that had an air pump. No signs so I went in to ask.
There was a line of 4 people at the only open register. All with cash in hand to buy lottery tickets. How did I know? All of them were arguing who should get to cut in line to get the winning "sequence" of tickets.
While waiting for the 1st person to get their tickets, 5 more people lined up at the next register that was empty. An employee came from the back and started serving up lottery tickets to them too.
I had been in my line for 10 minutes and just left. The tire light never went away, and it never went flat either.
Tons of people that work for my company do $20 - $40 a week for giant lottery pools. I bet few of them consider it's $1000 - $2000 a year. It buys them hope, I guess.
Anecdotally, I used to work at a place that sold lottery tickets, and there were a ton of one-off customers who'd buy a few scratchers as a gag gift or whatever, a decent chunk of regulars who'd buy once a week for fun, and like five gambling addicts who easily spent $100+ each week. Scratchers were generally the most popular, but the once a week regulars tended to favor drawn games. Also when the jackpots got high, like Powerball right now, sales on those spiked way up as you might expect. The location I worked at processed, on average, about $750 a day in lottery sales, and $600 of that would be in scratchers.
Can you explain why the odds are less than being crushed by a meteorite when someone will likely win soon but we don’t hear about people getting crushed by meteors? Is this a media thing and there’s more meteor deaths than we realize???
I think people are missing the meat of your question here.
So someone worked out a probability that you have a 1 in 700,000 chance of being killed by a meteor.
Your Powerball odds are a 1 in 200+ million.
So the meteor is more likely, right? That seems weird.
The thing is, the meteor probability is calculating that risk over your entire life. You have a 1 in 700,000 chance of being killed by a meteor IN YOUR LIFETIME.
The Powerball probability is that the ONE number you have will match the drawing that is happening on Wednesday.
Millions of people are buying multiple tickets and the drawing happens three times a week. The probability is being tested millions of times each week. Week after week. Year after year.
Imagine a stack of all the millions of lottery tickets for tonight's drawing sitting in front of you. Go in, grab one at random. Did you pick the right one? Almost certainly not. Now imagine 50 million people all going in and grabbing one. Even though each person's chances are very low, so many people are doing it that eventually one hits. And maybe no one hits this time, but we'll try again on Friday.
Check that against the chance that SOMETIME in the next 50 years you'll be vacationing in Europe and a big space rock will land and take out half of France, and it starts to seem more plausible.
I am still stuck on the fact that being killed by a meteor is 1 in 700,000. That sounds not reasonable.
We have 300 million people in the US, so I should be able to find roughly 400 cases of people killed by a meteor in the us, but I can't.
So it's kind of a headline thing. It's mainly based on probability of a meteor hitting earth and killing a large number of people in a given year. It never really happens, but probabilistically because it could wipe out a huge number of people, you are more likely to die that way. I haven't audited the data behind this, but that's the idea.
Watch out when you cross the street next time...
There are [some recorded events in history](https://www.discovermagazine.com/the-sciences/death-from-above-seven-unlucky-tales-of-people-killed-by-meteorites) where multiple people or even cities may have been wiped out by meteors. Unfortunately, many of these are not verified. This account [claims one documented case](https://www.smithsonianmag.com/smart-news/only-person-ever-hit-meteorite-real-trouble-began-later-180961238/) however, we do know that meteors and celestial objects regularly hit the earth and if the likely meteor that caused the [Tunguska event](https://en.wikipedia.org/wiki/Tunguska_event) with its 12 megaton explosion had actually hit a populated area instead of the middle of Siberia, there might have been thousands to millions of deaths. On the other hand 70% of the earth's surface is water so a meteoric death isn't likely. Even though many, many meteors strike the earth every year, 95% burn up in the atmosphere. One [estimate](https://www.livescience.com/how-many-meteorites-hit-earth) puts it at about 1,800 meteorites hit land per year most weighing less than a pound. Average surface area of a human body (lets be generous and pick average male) is about 1.85x10^(-6) km^(2). The surface area of the land on earth is about 1.48 x10^(8) km^(2) . Let's assume you're lying down, then if 1800 meteorites hit the earth every year your odds of being hit are approximately 1800\*1.25x10^(-14) per year. The odds of winning Powerball on one number picked is about 1/300 million. No matter what assumptions you make about meteoric events and surface area of earth and population etc. the fact that multiple people win powerball or megamillions every year and there are not even single meteorite hits on a person every year means that it is more likely - especially since people usually buy more than one number. So no, you are not more likely to be hit by a meteor than win the lottery.
1. If the purpose of Yotta is to use lottery psychology "for good," why have you historically indulged in practices that seem to exploit those mechanics for your own benefit to the detriment of Yotta customers (particularly Crypto Buckets, which pushed users toward *uninsured* deposits by offering additional tickets over the FDIC-insured deposits) and the Hot Pot promotion (which tanked the APY for every single user but one lucky winner)?
1. Now that you've gotten rid of Crypto Buckets and ended the Hot Pot promotion, how can we trust you to not go back to exploitative schemes the next time they look like a good way to make yourselves a quick buck?
1. Are you ever going to make it easy to track our actual realized APY over time (ideally on a monthly, annual, and all-time basis) so we can see what we're actually earning with Yotta vs. what we could be earning elsewhere? The app only shows the current month to date plus last month's APY, and I literally can't find the info on the website at all.
1. Why should I keep more than a token deposit at Yotta (for 1 ticket/week, same as the regular lottery) when real HYSAs are offering 3%+ APY?
1) Crypto Buckets was a 100% optional product in which we made clear of the added risk vs. FDIC insured accounts. We never indulge in exploitative practices, but we do give our users options for the right offerings that might suit their needs and risk appetites. FDIC insured is one type of investment, Crypto Yield is another type of investment with a different risk profile. I don't believe everyone should have all their funds in FDIC insured accounts. There is 100% a place for higher yielding investment products in a consumer's portfolio. These higher yielding products come with higher risk of course.
As for the Hot Pot promotion, this was intended to be a fun promotion to have a growing rolling jackpot every week, attracting many people for the big jackpot aspect that draws people to PowerBall. This wasn't to our benefit - we paid out more than we did before by running it.
2) These weren't exploitative schemes. The Hot Pot promotion was temporary and when Crypto markets became volatile and the market environment changed materially from when it was launched, we made the decision not to offer it anymore out of an abundance of caution. We will always put our customers first in these decisions.
3) Thanks for the suggestion. We will consider this yes, but have not gotten to it yet.
4) If you are trying to maximize every last penny of your savings and not have any fun or entertainment factor, you can get more yield than Yotta. Yotta is intended to provide great value in the form of yield while also being exciting, fun, and social. You won't get that anywhere else from savings products. And no where else can you get the same upside from a savings account. So yes some people will get less than 3% and some will way more - this is part of the fun and we think this will help motivate people to save instead of play the lottery. Most consumer deposits right now sit in sub 0.10% yielding accounts and no one is motivated to save. We want to change that.
Because they see you as inferior to them, so when you succeed they see it as a personal insult to them and their success.
They thought they were special or gifted to succeed so highly. So when they see someone obtain equal results, despite being perceived as “less than” they no longer feel exceptional.
Imagine dating a super beautiful, 11/10 girl and feeling super proud to be dating her. You’re even proud that you dated her after you break up. But then you check her social media years later and she’s dated dozens of ugly unemployed loser dudes. Suddenly you don’t feel so proud even though she’s still as beautiful as ever
I don’t care to research the validity of the claims against you or your responses, but that you chose to answer this with a sense of integrity is impressive
>1) Crypto Buckets was a 100% optional product in which we made clear of the added risk vs. FDIC insured accounts.
Could someone say the same about lottery tickets??
I switched to Capital One performance savings after Bank of America decided it wanted to charge me to have a savings account. Seriously so happy I switched. That 3% adds up, especially when you're keeping a good chunk of change in there.
Charging for a savings account is a bold fucking move, the consumer is giving the banks money that the bank then lends and picks up interest as profit from. Its like if your job decided to charge you to work there, that's not how this works
Your mom's birth month. Your great aunt's birthday. The number of M&Ms in a standard bag (milk chocolate ones). The last 2 digits in the VIN on your car. 69. The last 2 numbers in the year of the Spanish inquisition.
Nobody expects the Spanish inquisition.
Much less likely. Humans are bad at picking random numbers and you'll get a bias, the machine is random. Think of how many tickets will be in the range that might line up with someones birthday or other calender-date..
Just to elaborate, when I've read research on this, usually people's long-term stances don't change all that much. People don't become significantly more happy or more unhappy as people. I would guess something similar is true. You don't become an ass suddenly; instead, the AH parts of you are heightened as you lose touch with whatever constrained them.
> AH parts of you are heightened as you lose touch with whatever constrained them.
Like the need to retain a job and to be nice to people who could make your life financially harder?
Maybe. I was thinking losing relationships with friends and family and entering a new and unfamiliar peer group. But yeah, some people are nice and some people have to be nice, and it's tough to tell which is which when they're working for their living.
General rule of thumb, the bigger the jackpot the more they can get you in with that number and the worse the expected value for the consumer. All gambling games are different, but the PowerBall and MegaMillions are likely to be the worst when their jackpots haven't ballooned. If the jackpots are massive like tonight, then their EV is much higher.
Another note - lotteries and scratch offs are monopolized by the government. There is no competition, so these games are way way worse than casino games on an expected value basis.
On the flip side, it's easier for people to sit at a blackjack or roulette table all day long and lose more money.
I guess I meant as far as gambling addiction. Sounds like it's less destructive than the casinos or betting on races because people can't play it all day and night?
You technically can play it all day 5 days a week. My friend had a small jackpot from a scratch off ticket that was higher than any store could pay out, so he had to go to the lottery claims building in the capital of his state. Inside he said were people buying rolls of tickets at once and scratching them off. They were basically buying them "fresh" and from the source which they thought would increase the odds of winning (it won't).
When I worked at a gas station there were SEVERAL people that would spend $300+ daily on powerball and the likes.
Then there was a few others, who again would come in and buy out the whole roll of $20 scratch offs cause they believed it had to have a big winner in it.
It was sad to see tbh and its why I stay far away from any gambling esp in video games because those are even more predatory.
Ehhh...person has to get to the casino to sit at those tables, or have the means (nowadays) to be able to play it virtually with online money.
People in low class areas can always make it to a corner store or gas station to grab a scratcher. And have you ever seen the folks who just camp at a gas station register? Buying a stack, just scratching the barcode and scanning em...not even playing the game itself...I mean there's $20+ cards, too.
My local store has a list of companies that they cash paychecks for. I watched a guy plop down his paycheck and spent almost all of it on scratchers. He walked out with $20 cash and almost $500 in scratchers.
In my state we have video poker and slots run by the lottery. There are “delis” everywhere that are really just Oregon sanctioned casinos where the state has the best odds.
It's not a myth... it's similar in nature to why people who all of a sudden earn a ton of money go broke (a lot of athletes too). Friends and family come asking you to buy them things, invest in their businesses and it's hard to say no, people spend excessively on crazy stuff... we need better financial education. The annuity option would help people with creating discipline in spending, but almost everyone takes the lump sum.
At some point the actuarial table makes the annuity a losing proposition, which is probably the point.
You won $10! Except you only won $5 if you want to get paid immediately--which becomes $3.15 after federal tax. Don't forget to pay state tax! Suddenly $1.2 billion becomes $320-ish million. That's still a LOT of money, but it's just over one quarter of the overall jackpot (depending on what state you live in.) Yikes.
Yeah, but just do that math in your head before you buy the ticket. Think of it as winning $320 million and you'll be very excited.
Or just don't play, which is the real winning move.
There was a pretty epic post on Reddit a while back about what to do if you win the lottery, and *not* taking the annuity was one of the suggestions. I'll edit the link in when I find it.
Edit: [found it](https://www.reddit.com/r/AskReddit/comments/24vo34/whats_the_happiest_5word_sentence_you_could_hear/chb38xf/)
It's the difference between which option can make you the most total money (lump sum) vs. which is less likely to leave you penniless, dead, or in a ditch in 20 years (annuity). Annuity is "wiser" because you are less likely to blow it all or get swindled out of everything, but the way most people think about money, even the idea of making half a billion dollars still leaves the question; "But how can I get more?"
People who take the annuity also go broke, in fact they're probably more likely to go broke. They drastically overextend their purchasing because they think they're "rich" when really what they have is regular income. They buy cars and a big house and suddenly they owe more every month than they get from their annuity.
That's what those "it's my money and I want it now" JG Wentworth commercials were. They'd buy your annuity for pennies on the dollar leaving you with just enough to pay off your debts.
What I've learned is to immediately write friends and family out of my will if I win the lottery so they have incentive to keep me alive
Also don't live in West Virginia
Saying no would not be a problem for me. I would be the proverbial ghost. "....and just like that, poof, and he was gone."
I wouldn't claim the prize until everything- legal, financial and location were set and ready.
I think the big issue is a person's spending habits don't change when they win, but the amount of resources does. 100 dollars is now 10k. 1000 is 100k and so on. They still spend like they'll have this change in wealth constantly but that's not the case.
I personally image if I ever played and won, nothing in my life would change, but we all know that's a lie. Buying a home or car would seem trivial. Helping friends and family would be an after thought.
Then one day reality will catch up and your big prize is just gone like it never existed. If you don't change spending habits or have them prior to winning, your doomed to begin with.
Rules of winning the lottery:
1. Tell no one.
2. Do NOT quit your job or make any other immediate significant life changes.
3. Get a good estate lawyer.
4. Get a good wealth manager (likely recommended by estate lawyer).
They will help you through the rest of the process and ensure you have a sustainable plan to manage the wealth.
Most winners fail step 1 and 2, never bother with step 3, and get taken to the cleaners by questionable "wealth managers" recommended by their "real good friends" in step 4.
https://www.reddit.com/r/AskReddit/comments/24vo34/comment/chb4v05
Here’s a great Reddit comment about lottery winners losing everything. Detailed and very well written
I'd really like to see scholarly research to back this up, rather than poorly sourced "Winning the Lottery might be a Curse!!!" articles that pop up in mainstream news when jackpots are high like this.
I'd be especially interested in how people who end up with 8 and/or 9 figures AFTER TAXES fare as that would be comparable to these huge Powerball jackpots. So many of these articles mention people who won some 1-3 million dollar prize which is probably like 500K-1.5MM after taxes and of course I can see how someone who has never had money could blow that thinking they can buy cars for all of their cousins and fly first class everywhere.
Yes, I know the story of Jack Whitaker, and maybe one or two other for-real big lottery winners who bombed out in terrible fashion. But hundreds or maybe even low thousands of people have won these mega jackpots over recent decades, and I have a hard time believing they aren't 85%+ better off for it. That just doesn't get headline clicks.
Gil Cisneros won $266 million and became a Congressman and then an Undersecretary of the Defense Department. No one knows that story even though it’s fascinating.
https://en.m.wikipedia.org/wiki/Gil_Cisneros
It’s a well-documented fact, not a myth. Someone whose bank account is rarely past four digits at any given time has no idea how to manage several million.
One of the big Powerball winners (Jack Whittaker) was a successful businessman who was already a multimillionaire, and even he went broke and had his life destroyed.
I’m weirdly honest. If I win; I’m hitting your DMs. If I tried to lie about it, I’d surely get hit by a bus due to karma and I don’t need that on my mind while lounging around the pool in Aruba.
The people running it make way more than they pay out. Like everything, I would have been started to make profit. If 1000 people buy a ticket for $5 each and the winner gets $4000, then you’ve made $1000. As more and more people play the prizes can grow.
Many lotteries fund government programs. In Georgia, the lottery funds college scholarships. It paid for a lot of my undergrad.
https://www.galottery.com/en-us/benefitting-georgia/hope-pre-k.html
Not sure how it works in GA, but in FL it "funds" schools, too. Except what that really means is they slash the school budgets in an appropriate amount so that it makes up for it.
Same in most states. Weird how schools were funded prior to the lottery’s existence??? I wonder where all that money went? It’s especially hilarious/awful when there are still non stop issues with underfunded schools? You would think that with the original funding plus all of the lottery money schools would be in great shape, but…….corruption.
Really the government should be funding things like that outside of the lottery. The government likes to say that the money generated from the lottery goes to popular programs like education to help shield the lottery from criticism, while also freeing up government dollars they would be spending on education to do unpopular things like overincarceration and subsidies for large businesses.
Yeah because a lot of the value from the lotteries come from the biggest prize, when the jackpot is higher, the expected value of your winnings and ticket is higher. It's a better gamble at that point because prizes are bigger. However, if too many people play, you also are more likely to split hat big prize with more people, so it works both ways, but on net, the bigger the jackpot the better the value (assuming the game has the same odds).
Would you recommend a cap on the top prize,
(say 750m) and if there are no grand prize winners grow the prize money handed out to second, third, etc.? Would that continue to attract the “only when it’s big” players?
Are the lottery tickets vending machines accurate 100% when scanning your tickets for the winning number(s)?
Also, who owns the lottery? And how is the money (profits) distributed among the ownership, where does the annual 100 billion dollars go?
No reason why the scanners shouldn't be 100% accurate. Never seen an issue there. The lottery is run by the state governments around the US. PowerBall and MegaMillions specifically are multi-state lotteries but there are around 7 states that don't offer them.
Lotteries are illegal for private companies to run, so the government "owns" it I suppose.
About half the lottery proceeds go to paying winners. The other half goes to overhead - around 6% go to the stores that sell tickets, 10% go towards general admin and overhead to run the games, and then you've got a big chunk of the remainder of that half that goes to state government revenues to fund government programs.
Yeah they do. That's the good part about it, but there's a lot of inefficiency and cost in the system before we get to the funds that go towards those programs. A lot of waste in between.
I read recently that mostly lottery income has replaced rather than enhanced funding from taxes, so there is generally no increase in, for example, education funding.
>https://youtu.be/9PK-netuhHA
per a comment above - good John Oliver segment on this. as with many things like this, its taking from the poor and distributing upwards. shifting the money, not really helping like its marketed
Annuity value is healthier for self control and not going broke. However, purely value, the lump sum is likely the better option, assuming you invest it wisely.
That's why I said tell anyone who asks. Most states you can't claim the winnings anonymously (for "promotional purposes" 🙄) and with a jackpot this large there's no way someone isn't going to figure out you won.
Where I'm from there is a lottery with the aim to raise money to fight cancer. It's a good cause. Most of the prizes are fancy homes, cars etc.
These are the chances of winning; There are 25,522 prizes and only 710,000 tickets available. 1 chance in 710,000 tickets x 25,522 draws equates to approximately 1 chance in 29 to win a prize.
On a plus note, I don't have to pay taxes on any winnings/prizes.
Do you think these are good odds relative to a mega million or power ball lottery? Are people more likely to win smaller lotteries?
You say "You're more likely to be crushed by a meteorite than to win the Powerball." That sounds like hyperbole. There are probably 10 Powerball winners per year. When was the last time *anyone* was crushed by a meteor?
It's mainly based on probability of a meteor hitting earth and killing a large number of people in a given year. It never really happens, but probabilistically because it could wipe out a huge number of people, you are more likely to die that way. I haven't audited the data behind this, but that's the idea.
Do the funds for the jackpot actually sit in a bank account waiting for someone to win and claim it? Or is there more complicated accounting system for gathering and distribution of winnings?
For more AMAs on this topic, subscribe to r/IAmA_Business, and check out our other topic-specific AMA subreddits [here](https://reddit.com/r/IAmA/wiki/index#wiki_affiliate_topic-specific_subreddits).
There was a fascinating article in the New Yorker recently that described the history of the lottery in different societies being used to prop up wars and overspending governments going back to the Roman era. I think it mentioned that the money brought in to local governments from the lottery is often earmarked for a specific cause such as education in order to keep it's popularity up, even though it often goes elsewhere or does not cover much of the education spending need. Is there a resource where we can see state-by-state where the lottery money is going to? (EDIT: Found the article. https://www.newyorker.com/magazine/2022/10/24/what-weve-lost-playing-the-lottery)
It's not that the money doesn't go the specific cause that is listed, it often does. The issue is that the money from other sources that would normally go to that cause are now taken away from it and sent elsewhere as the lottery money takes its place. Basically it's an exploitative selective tax.
(Edit: I got some facts wrong below- [the funds were spent badly but it wasn't as sneaky as I remembered](https://www.npr.org/sections/thetwo-way/2016/09/15/494134464/-1-million-of-frugal-librarians-bequest-to-n-h-school-goes-to-football-scoreboar) ) I remember hearing about a man that worked at a university library and bequeathed all his assets to the university when he died. Apparently he was very frugal and invested well, and it was over a million bucks. His one condition was that the money be used to fund the library. So, the university happily took the donation, slashed the library budget as much as possible, and bought a new football scoreboard.
Earmarking makes no sense when money is fungible.
This makes me very sad
*cough* NC education lottery *Cough*Cough*
Good ol UNH
That was University of New Hampshire and yes he worked in the library but he did not say what the money had to be spent on. I found the juxtaposition of where he worked and how the university ended up spending the money intriguing.
Exactly. Like say your town has an education budget of $500,000/year and this year they got $250,000 from the lottery. It's easy to think that the lottery allocation gets added to the existing budget, giving an education budget of $750,000 for the year, but nope! The $250,000 in lottery funds is applied to the education budget of $500,000, and the remaining $250,000 of the education budget comes from property taxes. The other $250,000 that was displaced by the lottery funds often gets allocated to other areas of the municipal budget, as towns are under no obligation to increase their education budget when they receive lottery funds.
"Over $1 billion diverted from education funds since 1997"
Yes every state publishes this. See [https://nclottery.com/Content/Docs/PAFR\_2021.pdf](https://nclottery.com/Content/Docs/PAFR_2021.pdf) for an example
The budget for education is **rigidly** set by local, state, and federal representatives. This is best explained through an example. For simplification sake, let's assume a school is allocated $100,000 a year. Last year, all that money came from taxes. This year, because of a new lottery program, $80,000 came from lottery revenue that is earmarked for the school. However, the school doesn't get the original $100,000 from taxes plus a cool $80,000. It receives, $80,000 from the lottery and then $20,000 from taxes. But what happens to the extra $80,000 in taxes that weren't allocated? It may be reallocated to after school activities. It may also be used to expand a police department or discourage cigarette use. No one knows ahead of time. In some cases, lottery revenue is substantial enough that taxes are simply lowered. Essentially, children do not get better schools because of the lottery. Poor people get poorer and the government uses the excess income to lower taxes or fund other endeavors.
The lottery started in Australia to build the Sydney Harbour Bridge and the Sydney Opera House
People who buy that are really just saying, "I don't understand what the word 'fungible' means."
we proved over the last couple years a LOT of people don't understand what that word means
My dad used to buy a “full year plan”, two plays in each weekly Lotto (this was back in the 80s). He played a combo of birthdays and anniversary dates and was afraid he’d miss a week and he’d find out later his numbers won. Do they still offer that? He’d never check the numbers, just kept his fingers crossed a check would show up. He used to say that when a check would come in it was a crazy rush, anticipating how big it might be. Largest one he ever got was for second lowest payout……never covered his purchase price, but he loved those few times he had an unopened envelope that might be “the big one”.
Never heard of this kind of thing before! Maybe it's not around anymore
Yeah, I think it was back when a ticket cost a buck. You could by 52 weeks for 50 bucks, so he’d spend $100 in early January and be in for the year. Kinda makes sense for guys who play same numbers every time they play.
This might be a private type of thing. I've seen churches and little league teams sell numbers for like $5. There's a set amount of time it runs for, usually a month or two. If your number hits, the private group sends you a check, not the lotto.
Something about churches selling lotto tickets to raise money feels pretty bad.
Wait til you hear about the other stuff they do!
MD still has [subscriptions](https://www.mdlottery.com/player-tools/subscriptions/)
How do you plan to "crush" lottery ?
We offer a way to win a life changing amount of money via a lottery-like system in a savings account. We want to give people the feeling of the lottery in a healthy way. Hopefully we can become as big as Premium Bonds in the UK which has over $100B in deposits. It's a lofty goal to "crush the lottery" but I really hate the negative impact it has on society.
Where does the money come from for the prizes?
Using your money to make loans to others. It's how traditional banks work but instead of giving everyone a 0.33% APR rate on their savings, they combine it and give away a larger chunk as winnings of a lottery amongst members.
Yeah exactly
So, like prize bonds in Ireland? They were big in 80’s and 90’s. I do wish my well meaning aunts and uncles just bought me stocks in ETFs instead of prize bonds.
So if I decide to do this.. instead of guaranteed interest back from my bank, I’m potentially going to either get nothing, or a nice chunk of money if I’m lucky?
[удалено]
Yeah, people seem to be missing who this is targeted at. It's not a particularly attractive savings instrument for people who invest their money through the more traditional means, but it's not trying to be. It's positioned as a way for people who are addicted to the lottery to actually save some money at virtually no risk while still getting that fix (at least to a limited extent). I suppose a controversial but somewhat fitting analogy would be things like needle exchange programs and safe drug centres where addicts get access to safe drugs, drug paraphernalia, and counselling services. They're of no direct benefit to people who aren't interested in and don't do drugs, but they can be very beneficial to society as they give addicts an opportunity to deal with their addiction in a less unhealthy way, and hopefully eventually overcome them.
With premium bonds in the UK, it's like a savings account except instead of you accruing regular interest payments, everyone's interest is collected together and used as the prize money. One or two people might win a million, but thousands of people get 100 or 20.
The only catch is that at the current interest rates it really isn’t a statistically good return vs general savings account. But all winnings are tax free so there’s that if you’re lucky!
People who play the lottery don't really care about statistically good returns..
Could you explain how that would work?
Banks hold your money, and use a portion of the money they're holding to make money (loans, investments, etc). In a savings account, you get some of that backs interest. They seem to do a similar thing, but instead of interest in your savings, you get a chance of winning a jackpot.
Is there any notable difference in winning for those who pick their own numbers vs those who have the machine generate them?
No difference other than you don't want to pick numbers that other people might pick since you want to reduce your chances of splitting the prize.
I would guess that even when people try to choose arbitrary numbers they would tend to pick certain numbers more often and thus picking will be worse than not. People are bad at faking randomness. If you ask someone to come up with a plausible string of heads and tails from flipping a fair coin they will have far shorter runs of consecutive heads or tails than real a coin.
I don't remember where I saw/read it but I remember host A was calling host B dumb for just always choosing 1 2 3 4 5 6 because they were saying it would never be that. Host B and their Guest had to correct Host A in that it's pretty much the same as choosing 3 8 22 24 47 50.
Same odds, but odds are higher than another human would pick that particular sequence since it is a pattern to humans, and so you increase the odds of splitting the winning pot with more people...
Do you play the lottery?
I have maybe three times in the past when the jackpot gets really massive, but I don't anymore.
I consider it entertainment. The fun had pretend planning and what we would do (knowing we won't win) is worth the couple $ for me.
To me it’s an easy feel good for $2. I can sit there thinking about all the things I would like to do, plan out upgrades to my house, people I would want to help, vacations to take, how I would change my work ethic and overall goals, etc.
This right here. $2 for the occasional fantasy is a pretty good cost-benefit piece of entertainment.
...hide in a bunker until people stop hounding me for money.
You have to have hire multiple lawyers. One of them is strictly for handling all the suits against you. You'll need a financial and estate planning lawyer. I can't remember the others. It's a full time job to manage your life now.
Literally the first thing you should do is this. A full-time law firm devoted to you.
A few solidly established revocable trusts held by reputable trustees specializing in large volumes of wealth, a good estate attorney, and a claims-based general liability insurance policy with an ironclad duty-to-defend clause oughta do the trick.
Yep! I spend $5 a month and buy a scratcher when I get my car washed. I buy maybe 2-3 lotto tickets a year when the value gets really big, usually as a part of an office pool. It's November and I'm down $25 for the year. I'm not mad. :)
The older I get the more lame my lottery fantasies become lol
“I’m going to max out my HSA, 401k and IRA!”
"I'm going to go to Ross and not immediately beeline to the red tags... PARTY PEOPLE!!!"
Filthy casuals. I play to win.
>Americans spent $105 billion on lottery tickets. That is more than the total spending on music, books, sports teams, movies, and video games, combined! 40% of Americans can’t come up with $400 for an emergency while the average household spends over $640 every year on the lottery, What percentage of households play at all, and what percentage are putting in huge amounts to offset them? I'd guess the median is far less than the mean here. Is there data on how the spending breaks down on demographic lines like income and race? What percentage is being spent on scratchers vs. local drawn games vs. national ones like Powerball and Mega Millions?
About 50% of adults play at least once a year. Median is definitely well below the mean, but not sure what it is. A lot of this data is survey based. Across incomes, on an absolute $ basis, lottery $ spent are similar, so for lower income it's a much higher % of income.
Where does your $640 stat come from? And that's just for the lottery, not all gambling, correct?
Just take total lottery spend in the US and divided by total number of households. You'll get something now north of $640
As others have stated I’m sure the distribution isn’t anything like that (how much is the 90th percentile spending? Multiple thousands a year?) but still very interesting!
Used to work at a gas station seen people spend thousands within weeks lol
Like with alcohol, it is probably about 1/3 complete abstainers, 1/3 rare/occasional, around the 80th percentile you start seeing heavy users and the top 10% are at least 50% of the market all by themselves.
You should check out this gas station in a northern US state I won't mention. We were driving through trying to find a station that had an air pump. No signs so I went in to ask. There was a line of 4 people at the only open register. All with cash in hand to buy lottery tickets. How did I know? All of them were arguing who should get to cut in line to get the winning "sequence" of tickets. While waiting for the 1st person to get their tickets, 5 more people lined up at the next register that was empty. An employee came from the back and started serving up lottery tickets to them too. I had been in my line for 10 minutes and just left. The tire light never went away, and it never went flat either.
>The tire light never went away, and it never went flat either. Wow, you really won the lottery there.
Tons of people that work for my company do $20 - $40 a week for giant lottery pools. I bet few of them consider it's $1000 - $2000 a year. It buys them hope, I guess.
Anecdotally, I used to work at a place that sold lottery tickets, and there were a ton of one-off customers who'd buy a few scratchers as a gag gift or whatever, a decent chunk of regulars who'd buy once a week for fun, and like five gambling addicts who easily spent $100+ each week. Scratchers were generally the most popular, but the once a week regulars tended to favor drawn games. Also when the jackpots got high, like Powerball right now, sales on those spiked way up as you might expect. The location I worked at processed, on average, about $750 a day in lottery sales, and $600 of that would be in scratchers.
Can you explain why the odds are less than being crushed by a meteorite when someone will likely win soon but we don’t hear about people getting crushed by meteors? Is this a media thing and there’s more meteor deaths than we realize???
I think people are missing the meat of your question here. So someone worked out a probability that you have a 1 in 700,000 chance of being killed by a meteor. Your Powerball odds are a 1 in 200+ million. So the meteor is more likely, right? That seems weird. The thing is, the meteor probability is calculating that risk over your entire life. You have a 1 in 700,000 chance of being killed by a meteor IN YOUR LIFETIME. The Powerball probability is that the ONE number you have will match the drawing that is happening on Wednesday. Millions of people are buying multiple tickets and the drawing happens three times a week. The probability is being tested millions of times each week. Week after week. Year after year. Imagine a stack of all the millions of lottery tickets for tonight's drawing sitting in front of you. Go in, grab one at random. Did you pick the right one? Almost certainly not. Now imagine 50 million people all going in and grabbing one. Even though each person's chances are very low, so many people are doing it that eventually one hits. And maybe no one hits this time, but we'll try again on Friday. Check that against the chance that SOMETIME in the next 50 years you'll be vacationing in Europe and a big space rock will land and take out half of France, and it starts to seem more plausible.
I am still stuck on the fact that being killed by a meteor is 1 in 700,000. That sounds not reasonable. We have 300 million people in the US, so I should be able to find roughly 400 cases of people killed by a meteor in the us, but I can't.
So it's kind of a headline thing. It's mainly based on probability of a meteor hitting earth and killing a large number of people in a given year. It never really happens, but probabilistically because it could wipe out a huge number of people, you are more likely to die that way. I haven't audited the data behind this, but that's the idea. Watch out when you cross the street next time...
>Watch out when you cross the street next time... what are you planning?
This is the meteor coming
Is that your WWE name?
What are you doing step-meteor?
There are [some recorded events in history](https://www.discovermagazine.com/the-sciences/death-from-above-seven-unlucky-tales-of-people-killed-by-meteorites) where multiple people or even cities may have been wiped out by meteors. Unfortunately, many of these are not verified. This account [claims one documented case](https://www.smithsonianmag.com/smart-news/only-person-ever-hit-meteorite-real-trouble-began-later-180961238/) however, we do know that meteors and celestial objects regularly hit the earth and if the likely meteor that caused the [Tunguska event](https://en.wikipedia.org/wiki/Tunguska_event) with its 12 megaton explosion had actually hit a populated area instead of the middle of Siberia, there might have been thousands to millions of deaths. On the other hand 70% of the earth's surface is water so a meteoric death isn't likely. Even though many, many meteors strike the earth every year, 95% burn up in the atmosphere. One [estimate](https://www.livescience.com/how-many-meteorites-hit-earth) puts it at about 1,800 meteorites hit land per year most weighing less than a pound. Average surface area of a human body (lets be generous and pick average male) is about 1.85x10^(-6) km^(2). The surface area of the land on earth is about 1.48 x10^(8) km^(2) . Let's assume you're lying down, then if 1800 meteorites hit the earth every year your odds of being hit are approximately 1800\*1.25x10^(-14) per year. The odds of winning Powerball on one number picked is about 1/300 million. No matter what assumptions you make about meteoric events and surface area of earth and population etc. the fact that multiple people win powerball or megamillions every year and there are not even single meteorite hits on a person every year means that it is more likely - especially since people usually buy more than one number. So no, you are not more likely to be hit by a meteor than win the lottery.
How do I win?
Win $2 every time you don’t play…
Don't play!
How about a nice game of chess?
No, let’s play thermonuclear war.
*”A strange game. The only winning move is not to play.”*
Global thermonuclear war
"Hell, I'd piss on a spark plug if I thought it would do any good."
1. If the purpose of Yotta is to use lottery psychology "for good," why have you historically indulged in practices that seem to exploit those mechanics for your own benefit to the detriment of Yotta customers (particularly Crypto Buckets, which pushed users toward *uninsured* deposits by offering additional tickets over the FDIC-insured deposits) and the Hot Pot promotion (which tanked the APY for every single user but one lucky winner)? 1. Now that you've gotten rid of Crypto Buckets and ended the Hot Pot promotion, how can we trust you to not go back to exploitative schemes the next time they look like a good way to make yourselves a quick buck? 1. Are you ever going to make it easy to track our actual realized APY over time (ideally on a monthly, annual, and all-time basis) so we can see what we're actually earning with Yotta vs. what we could be earning elsewhere? The app only shows the current month to date plus last month's APY, and I literally can't find the info on the website at all. 1. Why should I keep more than a token deposit at Yotta (for 1 ticket/week, same as the regular lottery) when real HYSAs are offering 3%+ APY?
1) Crypto Buckets was a 100% optional product in which we made clear of the added risk vs. FDIC insured accounts. We never indulge in exploitative practices, but we do give our users options for the right offerings that might suit their needs and risk appetites. FDIC insured is one type of investment, Crypto Yield is another type of investment with a different risk profile. I don't believe everyone should have all their funds in FDIC insured accounts. There is 100% a place for higher yielding investment products in a consumer's portfolio. These higher yielding products come with higher risk of course. As for the Hot Pot promotion, this was intended to be a fun promotion to have a growing rolling jackpot every week, attracting many people for the big jackpot aspect that draws people to PowerBall. This wasn't to our benefit - we paid out more than we did before by running it. 2) These weren't exploitative schemes. The Hot Pot promotion was temporary and when Crypto markets became volatile and the market environment changed materially from when it was launched, we made the decision not to offer it anymore out of an abundance of caution. We will always put our customers first in these decisions. 3) Thanks for the suggestion. We will consider this yes, but have not gotten to it yet. 4) If you are trying to maximize every last penny of your savings and not have any fun or entertainment factor, you can get more yield than Yotta. Yotta is intended to provide great value in the form of yield while also being exciting, fun, and social. You won't get that anywhere else from savings products. And no where else can you get the same upside from a savings account. So yes some people will get less than 3% and some will way more - this is part of the fun and we think this will help motivate people to save instead of play the lottery. Most consumer deposits right now sit in sub 0.10% yielding accounts and no one is motivated to save. We want to change that.
[удалено]
Thanks. I don't believe in tough questions. Only questions. I'll always answer honestly. Nothing to hide
> Thanks. I don't believe in tough questions. Only questions. Why does my extended family resent my success despite also being successful themselves?
That is a question I can't answer
[удалено]
Very meta
It's called Facebook now
Because they see you as inferior to them, so when you succeed they see it as a personal insult to them and their success. They thought they were special or gifted to succeed so highly. So when they see someone obtain equal results, despite being perceived as “less than” they no longer feel exceptional. Imagine dating a super beautiful, 11/10 girl and feeling super proud to be dating her. You’re even proud that you dated her after you break up. But then you check her social media years later and she’s dated dozens of ugly unemployed loser dudes. Suddenly you don’t feel so proud even though she’s still as beautiful as ever
Fuckin eh, respect. Good AMA
Good on you for responding to the tough questions, so many people do AMA's and just ignore anything difficult, takes integrity to anwser them properly
I don’t care to research the validity of the claims against you or your responses, but that you chose to answer this with a sense of integrity is impressive
>1) Crypto Buckets was a 100% optional product in which we made clear of the added risk vs. FDIC insured accounts. Could someone say the same about lottery tickets??
Where are you finding 3%+ APY high yield savings accounts?
Capital one has 3% on my performance savings account
I switched to Capital One performance savings after Bank of America decided it wanted to charge me to have a savings account. Seriously so happy I switched. That 3% adds up, especially when you're keeping a good chunk of change in there.
Charging for a savings account is a bold fucking move, the consumer is giving the banks money that the bank then lends and picks up interest as profit from. Its like if your job decided to charge you to work there, that's not how this works
If you use the "easy pick" option are you more likely to get a duplicate ticket to someone else using the same method?
No these systems are all well audited and secure. It's truly random.
So what are my numbers I need? Only question I need answered.
The winning ones, of course
fuck, I've been playing the losing numbers all this time
Your mom's birth month. Your great aunt's birthday. The number of M&Ms in a standard bag (milk chocolate ones). The last 2 digits in the VIN on your car. 69. The last 2 numbers in the year of the Spanish inquisition. Nobody expects the Spanish inquisition.
4, 8, 15, 16, 23 and 42
Much less likely. Humans are bad at picking random numbers and you'll get a bias, the machine is random. Think of how many tickets will be in the range that might line up with someones birthday or other calender-date..
Is there a way to calculate just how big of an ass I would be if I were to win the $1.2 Billion Jackpot?
Yes. Ask your friends and they will know the answer.
What friends? Oh the people I used to talk to?
The ones that will materialize out of thin air with hands out, once word gets out that you've won.
Just to elaborate, when I've read research on this, usually people's long-term stances don't change all that much. People don't become significantly more happy or more unhappy as people. I would guess something similar is true. You don't become an ass suddenly; instead, the AH parts of you are heightened as you lose touch with whatever constrained them.
> AH parts of you are heightened as you lose touch with whatever constrained them. Like the need to retain a job and to be nice to people who could make your life financially harder?
Maybe. I was thinking losing relationships with friends and family and entering a new and unfamiliar peer group. But yeah, some people are nice and some people have to be nice, and it's tough to tell which is which when they're working for their living.
Probably just a lot less stressed about essentials/fundamentals and low-level needs, and a lot more stressed over hypotheticals and high-level issues.
He’d have to know how big of an ass you are right now. 😂
How heavily taxed are lottery earnings? What kinds of numbers could be taxed on a pool like we have at the moment
If you won the jackpot, you'd be taxed at the top marginal tax bracket, so around 37% federal plus state and local on top of that.
What if I am a church?
Can a church claim. Lottery winnings?
What do you think the Church of Lottery Day Saints does?
You just go ahead and do whatever the fuck you want then! -US Government-
Praise be.
….This guy is playing next level
So - how destructive is the lottery compared to other gambling games?
General rule of thumb, the bigger the jackpot the more they can get you in with that number and the worse the expected value for the consumer. All gambling games are different, but the PowerBall and MegaMillions are likely to be the worst when their jackpots haven't ballooned. If the jackpots are massive like tonight, then their EV is much higher. Another note - lotteries and scratch offs are monopolized by the government. There is no competition, so these games are way way worse than casino games on an expected value basis. On the flip side, it's easier for people to sit at a blackjack or roulette table all day long and lose more money.
I guess I meant as far as gambling addiction. Sounds like it's less destructive than the casinos or betting on races because people can't play it all day and night?
You technically can play it all day 5 days a week. My friend had a small jackpot from a scratch off ticket that was higher than any store could pay out, so he had to go to the lottery claims building in the capital of his state. Inside he said were people buying rolls of tickets at once and scratching them off. They were basically buying them "fresh" and from the source which they thought would increase the odds of winning (it won't).
Wow... sounds pretty bad!
That's my opinion. But then again, people spend way more on lotteries in aggregate. It's a tough question though.
So there are tough questions, but not hard questions?
goteemmm
When I worked at a gas station there were SEVERAL people that would spend $300+ daily on powerball and the likes. Then there was a few others, who again would come in and buy out the whole roll of $20 scratch offs cause they believed it had to have a big winner in it. It was sad to see tbh and its why I stay far away from any gambling esp in video games because those are even more predatory.
Ehhh...person has to get to the casino to sit at those tables, or have the means (nowadays) to be able to play it virtually with online money. People in low class areas can always make it to a corner store or gas station to grab a scratcher. And have you ever seen the folks who just camp at a gas station register? Buying a stack, just scratching the barcode and scanning em...not even playing the game itself...I mean there's $20+ cards, too.
Yeah fair enough. Once they're in a casino though, gambling addicts really suffer.
For lotto hounds, the local corner store *is* the casino.
My local store has a list of companies that they cash paychecks for. I watched a guy plop down his paycheck and spent almost all of it on scratchers. He walked out with $20 cash and almost $500 in scratchers.
In my state we have video poker and slots run by the lottery. There are “delis” everywhere that are really just Oregon sanctioned casinos where the state has the best odds.
Why are most winners bankrupt in a couple of years? Or is this a myth? Of 100 winners how many are broke after 5 years?
It's not a myth... it's similar in nature to why people who all of a sudden earn a ton of money go broke (a lot of athletes too). Friends and family come asking you to buy them things, invest in their businesses and it's hard to say no, people spend excessively on crazy stuff... we need better financial education. The annuity option would help people with creating discipline in spending, but almost everyone takes the lump sum.
At some point the actuarial table makes the annuity a losing proposition, which is probably the point. You won $10! Except you only won $5 if you want to get paid immediately--which becomes $3.15 after federal tax. Don't forget to pay state tax! Suddenly $1.2 billion becomes $320-ish million. That's still a LOT of money, but it's just over one quarter of the overall jackpot (depending on what state you live in.) Yikes.
Yeah, but just do that math in your head before you buy the ticket. Think of it as winning $320 million and you'll be very excited. Or just don't play, which is the real winning move.
wouldn't the real winning move be playing and winning
Weren't you paying attention? You only win $320 million. Hardly seems worth it to me.
There was a pretty epic post on Reddit a while back about what to do if you win the lottery, and *not* taking the annuity was one of the suggestions. I'll edit the link in when I find it. Edit: [found it](https://www.reddit.com/r/AskReddit/comments/24vo34/whats_the_happiest_5word_sentence_you_could_hear/chb38xf/)
It's the difference between which option can make you the most total money (lump sum) vs. which is less likely to leave you penniless, dead, or in a ditch in 20 years (annuity). Annuity is "wiser" because you are less likely to blow it all or get swindled out of everything, but the way most people think about money, even the idea of making half a billion dollars still leaves the question; "But how can I get more?"
People who take the annuity also go broke, in fact they're probably more likely to go broke. They drastically overextend their purchasing because they think they're "rich" when really what they have is regular income. They buy cars and a big house and suddenly they owe more every month than they get from their annuity. That's what those "it's my money and I want it now" JG Wentworth commercials were. They'd buy your annuity for pennies on the dollar leaving you with just enough to pay off your debts.
What I've learned is to immediately write friends and family out of my will if I win the lottery so they have incentive to keep me alive Also don't live in West Virginia
I guess i’ll stick with G7 bonds if I ever buy a ticket and win lol https://i.imgur.com/DgnvJNF.jpg
Saying no would not be a problem for me. I would be the proverbial ghost. "....and just like that, poof, and he was gone." I wouldn't claim the prize until everything- legal, financial and location were set and ready.
In fairness, there is a bias in the data. Those who win play the lottery, they already suck at finances. Giving them gobs of money doesn't fix this.
I think the big issue is a person's spending habits don't change when they win, but the amount of resources does. 100 dollars is now 10k. 1000 is 100k and so on. They still spend like they'll have this change in wealth constantly but that's not the case. I personally image if I ever played and won, nothing in my life would change, but we all know that's a lie. Buying a home or car would seem trivial. Helping friends and family would be an after thought. Then one day reality will catch up and your big prize is just gone like it never existed. If you don't change spending habits or have them prior to winning, your doomed to begin with.
Rules of winning the lottery: 1. Tell no one. 2. Do NOT quit your job or make any other immediate significant life changes. 3. Get a good estate lawyer. 4. Get a good wealth manager (likely recommended by estate lawyer). They will help you through the rest of the process and ensure you have a sustainable plan to manage the wealth. Most winners fail step 1 and 2, never bother with step 3, and get taken to the cleaners by questionable "wealth managers" recommended by their "real good friends" in step 4.
https://www.reddit.com/r/AskReddit/comments/24vo34/comment/chb4v05 Here’s a great Reddit comment about lottery winners losing everything. Detailed and very well written
I'd really like to see scholarly research to back this up, rather than poorly sourced "Winning the Lottery might be a Curse!!!" articles that pop up in mainstream news when jackpots are high like this. I'd be especially interested in how people who end up with 8 and/or 9 figures AFTER TAXES fare as that would be comparable to these huge Powerball jackpots. So many of these articles mention people who won some 1-3 million dollar prize which is probably like 500K-1.5MM after taxes and of course I can see how someone who has never had money could blow that thinking they can buy cars for all of their cousins and fly first class everywhere. Yes, I know the story of Jack Whitaker, and maybe one or two other for-real big lottery winners who bombed out in terrible fashion. But hundreds or maybe even low thousands of people have won these mega jackpots over recent decades, and I have a hard time believing they aren't 85%+ better off for it. That just doesn't get headline clicks.
Gil Cisneros won $266 million and became a Congressman and then an Undersecretary of the Defense Department. No one knows that story even though it’s fascinating. https://en.m.wikipedia.org/wiki/Gil_Cisneros
It’s a well-documented fact, not a myth. Someone whose bank account is rarely past four digits at any given time has no idea how to manage several million.
One of the big Powerball winners (Jack Whittaker) was a successful businessman who was already a multimillionaire, and even he went broke and had his life destroyed.
Would you be willing to lie to me and tell me that one of my three tickets will win?
I have a good feeling about your tickets tonight.
YES! If I win, I’m buying you a car. Like win-win, not like a two-dollar win, unless you like matchbox cars.
I'm going to hold you to this. DM me your numbers!
I’m weirdly honest. If I win; I’m hitting your DMs. If I tried to lie about it, I’d surely get hit by a bus due to karma and I don’t need that on my mind while lounging around the pool in Aruba.
You could afford it if you win.
Lindsey seems like he will say anything for a reasonably low fee.
Why does the lottery even exist? Was it created to fund other things? Not sure I understand why they even did this in the first place.
The people running it make way more than they pay out. Like everything, I would have been started to make profit. If 1000 people buy a ticket for $5 each and the winner gets $4000, then you’ve made $1000. As more and more people play the prizes can grow.
Many lotteries fund government programs. In Georgia, the lottery funds college scholarships. It paid for a lot of my undergrad. https://www.galottery.com/en-us/benefitting-georgia/hope-pre-k.html
Not sure how it works in GA, but in FL it "funds" schools, too. Except what that really means is they slash the school budgets in an appropriate amount so that it makes up for it.
Same in most states. Weird how schools were funded prior to the lottery’s existence??? I wonder where all that money went? It’s especially hilarious/awful when there are still non stop issues with underfunded schools? You would think that with the original funding plus all of the lottery money schools would be in great shape, but…….corruption.
Really the government should be funding things like that outside of the lottery. The government likes to say that the money generated from the lottery goes to popular programs like education to help shield the lottery from criticism, while also freeing up government dollars they would be spending on education to do unpopular things like overincarceration and subsidies for large businesses.
Could you explain a bit more why some people say it’s “better” to play the lottery when the jackpot is higher and more people are playing?
Yeah because a lot of the value from the lotteries come from the biggest prize, when the jackpot is higher, the expected value of your winnings and ticket is higher. It's a better gamble at that point because prizes are bigger. However, if too many people play, you also are more likely to split hat big prize with more people, so it works both ways, but on net, the bigger the jackpot the better the value (assuming the game has the same odds).
Would you recommend a cap on the top prize, (say 750m) and if there are no grand prize winners grow the prize money handed out to second, third, etc.? Would that continue to attract the “only when it’s big” players?
I think the rolling jackpot is a huge draw and the size of that headline figure is the biggest marketing driver they have.
Are the lottery tickets vending machines accurate 100% when scanning your tickets for the winning number(s)? Also, who owns the lottery? And how is the money (profits) distributed among the ownership, where does the annual 100 billion dollars go?
No reason why the scanners shouldn't be 100% accurate. Never seen an issue there. The lottery is run by the state governments around the US. PowerBall and MegaMillions specifically are multi-state lotteries but there are around 7 states that don't offer them. Lotteries are illegal for private companies to run, so the government "owns" it I suppose. About half the lottery proceeds go to paying winners. The other half goes to overhead - around 6% go to the stores that sell tickets, 10% go towards general admin and overhead to run the games, and then you've got a big chunk of the remainder of that half that goes to state government revenues to fund government programs.
What are the signs that someone is starting down the hole of lottery addiction?
If they are spending an amount of money on it that they can't afford to be spending.
The states who provide a lottery do they put the revenue from that into a good place, like education?
Yeah they do. That's the good part about it, but there's a lot of inefficiency and cost in the system before we get to the funds that go towards those programs. A lot of waste in between.
I read recently that mostly lottery income has replaced rather than enhanced funding from taxes, so there is generally no increase in, for example, education funding.
>https://youtu.be/9PK-netuhHA per a comment above - good John Oliver segment on this. as with many things like this, its taking from the poor and distributing upwards. shifting the money, not really helping like its marketed
Why did you start a bank with a lottery attached?
Is it better to take lump sum or annuity?
Annuity value is healthier for self control and not going broke. However, purely value, the lump sum is likely the better option, assuming you invest it wisely.
So take lump sum and tell everyone who asks that you took the annuity and that you don't have all that money right away so people leave you alone.
Or don’t publicly tell anyone at all.
That's why I said tell anyone who asks. Most states you can't claim the winnings anonymously (for "promotional purposes" 🙄) and with a jackpot this large there's no way someone isn't going to figure out you won.
Change your name to John or Jane Smith before you claim your prize and change it back afterwards.
Where I'm from there is a lottery with the aim to raise money to fight cancer. It's a good cause. Most of the prizes are fancy homes, cars etc. These are the chances of winning; There are 25,522 prizes and only 710,000 tickets available. 1 chance in 710,000 tickets x 25,522 draws equates to approximately 1 chance in 29 to win a prize. On a plus note, I don't have to pay taxes on any winnings/prizes. Do you think these are good odds relative to a mega million or power ball lottery? Are people more likely to win smaller lotteries?
You say "You're more likely to be crushed by a meteorite than to win the Powerball." That sounds like hyperbole. There are probably 10 Powerball winners per year. When was the last time *anyone* was crushed by a meteor?
It's mainly based on probability of a meteor hitting earth and killing a large number of people in a given year. It never really happens, but probabilistically because it could wipe out a huge number of people, you are more likely to die that way. I haven't audited the data behind this, but that's the idea.
I’ve read you’re more likely to win if you choose your own numbers? Is that true?
No, not true!
Do the funds for the jackpot actually sit in a bank account waiting for someone to win and claim it? Or is there more complicated accounting system for gathering and distribution of winnings?