Friday, January 14, 2011

Lottery Dreams

This is not a typical Ducks post. First and foremost, the bulk of this is not written by the beloved Ducks Guy. This is taken from an article written by Gregg Easterbrook, who apparently is a bit of a polarizing figure.

(While performing the atypical act of “conducting research,” I discovered that one of the drop-down selections in Google when searching “Gregg Easterbrook” is “Gregg Easterbrook is an idiot.”)

(Personally, I disagree.)

Anyhow, he writes a column that tackles science, government and social issues, along with sports, for The excerpt I am posting has nothing to do with sports, but rather the topic of lotteries… which brings us to another reason this is not a typical post: lack of humor.

Usually this blog is a place for goofy musing and attempts – sometimes successful!! – at being funny. Today’s post is more to make you think.

To complete my work in citing the source, this is from Gregg Easterbrook’s January 11th TMQ article “The next step: academics in the BCS?

(TMQ stands for “Tuesday Morning Quarterback,” which Easterbrook uses to refer to himself in the third person.)

Lotteries Bilk the Poor: Last week, the Mega Millions lotto paid what was described in media reports as a "$380 million" jackpot. Actually the number reflects an annuity that pays $380 million over 26 years. The present value of the annuity, the only figure that matters, is $240 million -- heady enough. Any money sum can be made to appear to roughly twice as great by expressing the number as a long-term annuity. If your employer offered you $50,000 this year, or $80,000 conveyed as one payment of $3,000 annually for each of the next 26 years -- the same proportion as the Mega Millions markup -- which would you choose? The media should not sensationalize lottery numbers by using the phony figures the lotto companies promote.

But that's the least of the problems with lotteries, whose financial structure -- spectacularly low chances of winning for players, combined with riches for those administering the lottos -- make them, as a wag once said, "a tax on the stupid." As TMQ wrote two years ago of state-sponsored lotteries, "There is almost no chance you will win, while total assurance you will lose the average of $190 annually that Americans throw away on government-run roulette. Worse, public lotteries, with their glitzy false promises of instant wealth, are a tax on poverty -- as David Brooks of The New York Times has noted, households with an income of less than $13,000 spend an average of $645 annually on scratch-off tickets, meaning the poor are the main group throwing away cash at government lotto sites." Government, which ought to aid the poor, instead cynically markets lottos to the poor -- with false promises of instant wealth, plus a high concentration of lotto sales outlets in low-income neighborhoods. The goal of this cynicism? Wealth for lotto companies and kickbacks -- excuse me, consulting fees -- for the politicians and government bureaucrats involved.

The cynicism is doubling in states that are essentially selling their lotto licenses. Illinois recently agreed to give a lotto management firm called Northstar Lottery a $15 million annual fee, plus around $300 million annually in bonuses, to run the state's lotto. Monique Garcia of the Chicago Tribune reported the deal is expected to bring about $900 million annually to the state, of which $625 million will be spent on education and $200 million on construction. Annual sales for the Illinois system are expected to be about $2.5 billion. Effectively, the state is tricking citizens out of $2.5 billion in order to get $900 million for itself.

Why won't most of the mainstream media cover the harm done to average people by throwing money away in state-run lotteries? This couldn't possibly have anything to do with the lottos buying advertising! The sorts of poor and working-poor people likely to fall for the lotto heist don't read the New York Times, they watch television -- and local television, especially, relentlessly hypes the lottos, a major source of ad revenue. Reporting the Northstar deal in September, newscaster Rob Johnson of the CBS station in Chicago said the ticket money "will be used for education and capital projects and will create thousands of jobs." That makes the lottery sound practically civic-minded. Except only about a third of the money will be used in this way, while "thousands" of new jobs is extremely unlikely.

What about the prizewinners? Many lotto winners end up bankrupt, miserable or both. TMQ's law of money holds that it would be really great to get $1 million, while getting $100 million would ruin your life. The lottery mindset of vast amounts conferred on few, while the majority suffers, is everything that's wrong with American materialism in a nutshell.

Football and lotto note: Not only do many NFL teams now participate in lotto marketing, lending their logos to tickets for a fee -- for shame, NFL owners -- so, too, do some colleges. Reader Peter Wunsch of East Northport, N.Y., notes the University of Florida is among colleges selling their logos to lotteries for a fee. And just try finding the odds at that University of Florida-endorsed lotto website -- all that's stated is "the odds of winning will vary." An institution of learning lends its logo to a company that uses deceptive marketing to participate in the fleecing of the poor -- for shame, University of Florida.


  1. Totally agree with every bit of this. I remember all this when Illinois along with many other states were toying with the lottery idea "to help our schools" ha! Now I live in Utah, probably the only state in the union to not have a lottery or allow gambling of any kind.

  2. "Except only about a third of the money will be used in this way, while "thousands" of new jobs is extremely unlikely."

    One third might be over-estimating the amount of Lotto Dollars that school systems actually garner, but I do believe it gives zero money to new jobs. Every California governor (elect) has promised to use the state lotto to better social services programs, and none of them do.

    I totally agree with this guy. And yes, I drop some money now and again into the lotto/lottery Wish for instant money. About $20 a year, if that. I probably spend more on entering writing contests, and I think the winning chance about as unlikely.

    Reality checks are necessary JM. Its good to post something like this once in a while.


  3. Here in NC the commercials say the state lottery gives 80% of the profits earned from the lotteries (several different kinds here) to education. IF that is true, then why is my daughter in a Title One School? Why is that same school asking for donations at least once a week (of course hidden behind restaurant nights for the teachers and PTO bazaars and theatre nights).

    The lottery is a lie. It always has been.

  4. I'm almost convinced that all the money they earn from lotteries goes to private pockets and wallets.


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