By Kenzie Plehn
A couple times recently, the lottery has been very high. When this happens, more people buy tickets, trying to win some amount of the lottery. When nobody wins for a certain time, it keeps building and building up until someone finally wins the jackpot Powerball. When more people begin to buy tickets, the amount that someone could win increases, and people’s chances of actually winning decrease.
Nearly 20% of the American population purchases lottery tickets. The majority of people that continue to buy and try to win are poor and uneducated. The poor people buy tickets in hopes of winning. Their hopelessness is covered by hope because they spend money to have a very slim chance of winning money. In 2012, $65.5 billion worth of lottery tickets were purchased by Americans in 2012. That is 10% more than 2011.
What happens with all that money? Yes, someone wins it, but after the government deducts some. Nearly 25% of that money goes to state governments for schools, construction, and, ironically, helping people that have gambling problems. And the rest of the money? Whoever ends up winning the lottery will most likely need a lawyer, accountant, financial planner, and a new phone number. The people’s name and town will go public but people should not share much more. People will constantly call for business investments, loans, and ridiculously unrealistic charges that don’t really cost that much.
One of the Powerball winners won $220 million in 2005. They seemed to have blown some of their money. He spent $63,000 on a vacation for himself and 17 friends. Did he even have 17 friends he would consider taking before he won the lottery? Everything besides that seems like something a lottery winner would spend money on maybe just not that much on it. People who win the lottery should not just blow it all right away.
The odd of matching all 5 numbers and the Powerball number (Grand prize) is 1 in 175,223,510. To even make $4 the odds are still 1 in 55 by matching the Powerball and 1 in 111 for the Powerball and a number.
The more tickets that are sold, the higher the chance that someone wins, obviously. The chart below shows the probability of a winner with the total amount of tickets sold. Chances of you winning even $4 which would only be $1.75 with only one ticket purchased after it’s all said and done? Still very very very slim. Spending more money on more tickets doesn’t improve your chances of winning more money; it just improves your chances of losing. So if you like losing, buying lottery tickets is for you. Who knows, you might win (but lose) someday. If you really wanted to be (un)successful at the lottery, you could go out and buy 35 tickets with a different Powerball number for each that would guarantee you win $4 but really lose money even though you won some. May the odds be rarely in your favor.
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Kenzie,
ReplyDeleteThis is a fascinating topic! My college business school finance professor once told us that the "net present value" (a way to evaluate financial investments) of gambling is negative. Your blog post reconfirms it! Still, so many people continue to buy tickets.
Mr. Batterman
I am shocked as well by the fact that so many individuals are purchasing lottery tickets, but one of the main reason could be that fact that they don't know better. I mean when you present such a high prize value to a consumer they do not realize that all of their earnings is not actually theirs. Unfortunately, the government appears to always be the biggest winner when it comes to the lottery because they will never loose. Who ever wins the money, they will always take a good portion of their earning back. It may be a good strategy for the government to increase their funding, but for us the consumers it really just eats up our income, fooling us rather than rewarding us.
ReplyDeleteThis is very interesting. The problem is that people will keep on buying tickets even if they know that there is no chance that they will ever win the lottery. People do it to have fun, I can see someone turning 18 and losing some money to the lottery to have fun but if a 50 year old is poor and he keeps on spending money on something that he will never win then there is a serious problem so I think it people should realize this.
ReplyDeleteWhen people hear "lottery" they hear "money". However, they are spending money to win money and they don't consider how much it is adding up to in the long run for them, when every single time they still aren't winning anything. It's amazing how often people think they are going to win the whole bunch. Just getting a job and seeing as how they deduct taxes out of their paycheck, they should have learned by now that any money amount they are guaranteed, will be lower than what they were expecting because of the government. With the chances of winning too, since they are so slim, they should stop getting their hopes up and blowing their money on something they can't afford all the time.
ReplyDeleteThe statistics of the lottery were really interesting. The way of presenting the information, especially at the end fit really well, as like you said, many who win lose. It's ridiculous how much of the money doesn't actually get put in your pocket once it is won, after all of the taxes and costs of winning are taken out. The lottery can be a really good thing for people to believe in, and some people do a lot of good with the money they win, but some people just really should not win the lottery or even know about it, and waste their lives hoping for just this one break.
ReplyDeleteIts actually mind blowing that people still buy the tickets even though it lowers the chances of winning. Although, with the jackpot being such a high number i'd most likely continue to buy the tickets. People buy the tickets because they don't realize that its lowering their chances, The lottery is probably one of the governments biggest sources of making money because they are bringing in so much money from the ticket sales.
ReplyDeleteLottery has to do with the amount of hope the buyer has in winning. Some may be poor but not all people are poor trying to win the lottery. Even though government takes 25% of winnings earned the winner would still get a large amount of money for spending only a couple of dollars on that ticket. I don’t really agree about what you were saying about “wasting” the money away because not all people are like that if they win the lottery. Some people may utilize the money in a appropriate way by not spending on junk but essential items needed in life.
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DeleteFor most people who win the lottery, they don't have much money and never really did. At least not ridiculous amounts (millions). Most people get so overwhelmed with the money that they think they have more than they actually do and don't know what to do with it so just blow it on things that they dream of and not what they should truly use it for. The money just goes to their heads.
DeletePeople by lottery tickets for the money but it is more likely to be struck by lightning 3 times. So why buy a lottery ticket why not just get struck by lightning. I think that people buy the lottery ticket for the thrill of it not just to win. But if someone does win what do you do with all that money. Would you go insane and buy a lot of things or would you donate the money and give it to charity. I would start my own charity and try to be help fun not just spend it on cars and toys
ReplyDeleteThe thrill of money, what it can do to people and how it controls our minds. All we think about is how we are going to buy this and pay for this. The thrill of the lottery is people expect all their problems to go away with money which forces them to think that they have a chance. The demand for lottery is so great in this time period because of the big fall down in the private sector with loss of jobs and the rising debt many people are sinking into. The people do not realize the marginal cost from buying a lottery ticket because they are paying for something that they believe to be their ticket to redemption. With jackpots its mind blowing to think that so many people buy tickets for a 1 in a million chance to win. People do not realize how low their chances are and what the outcome of their actions could be. Even when the people win the lottery they usually end up blowing it all off because they do not know what to do with it. They get scared and confused, so why buy the ticket in the first place if you do not realize the outcome and possible consequences?
ReplyDeleteThis makes me think about how stupid people can be with their money. If they were going to make an investment it would be more worth while to do it in something with higher chances to earn money such as a education. I know a few members of my family buy lottery tickets every once and awhile, but there are people out there who are addicts to these kinds of things. Basing all of their chances off of hope I truly feel bad for those kinds of people because they could do so much better for themselves with the money they're spending.
ReplyDeletean education*
DeleteReading this topic really showed me that some people just like throwing their money away on “stupid” things. One time I was watching Dr. Phil and he was talking to a woman who spent an average of $200 on lottery tickets a week. A WEEK! This was insane to me because she was a woman in debt and who could’ve spent her money on other things that were more important, yet she chose to spend them on these kinds of things. Yes, people actually do win the lottery sometimes, but that a one in a million chance that they had that luck. I mean if you’re one of the winners it’s good for you, but to be doing it every week is just crazy to me. I believe that people can do it every once in a while to have some fun, but if you’re doing it on a regular basis, you should stop and focus on the things that are most important.
ReplyDeletePeople continue to buy tickets because they don't think that they are really hurting themselves doing so. Buying a ticket that for example may cost $3.00 when you could win $3,000,000 makes it seem worth it, although it's not and that's what people need to realize. The amount you end up spending in the long run adds up to be a lot as with the lady that spent $200 a week, that's crazy!
ReplyDeleteTheir is nothing wrong with gambling what so ever and all bans on gambling should be abolished. Playing the lottery isn't destroying the poor, it's giving them some hope and in return for purchasing the tickets -- they're putting money back into their community. Of course, the odds are next to nothing for winning the jackpot; ultimately it's up to the choice of the user whether or not to risk it for the biscuit.
ReplyDeleteThis article was very interesting; what was most surprising were the statistics—I never knew exactly how slim the chances of winning are. If people aren’t addicted to the game, or to gambling in general, I don’t think there is any harm in purchasing tickets. However, when people start to rapidly lose money on the tickets, the smart thing to do is obviously stop buying them. I also found it interesting just how fast winners can blow through their winnings. I have seen a couple of shows on TV about how the lottery ruined people’s lives—they wasted all their winnings in an extremely short amount of time, saved close to nothing, and ended up in more debt than they previously were. I guess the main message here is to be smart with your money.
ReplyDeleteI never knew how crazy the statistics of gambling were until I read this. I now see why people use the phrase, "you have more chance of winning the lottery." As people buy more tickets, I didn't think your chances would drastically decrease that much. So, in reality, as the price of the jackpot increases you can kiss your chances goodbye more and more. All in all, the best thing would be to not take that huge, unlikely risk and save your money for something worth while.
ReplyDeleteYour article was seemed to have accurate information and it was interesting to see what goes on behind buying lottery tickets. People tend to spend their money on useless things, in which they are just throwing away their money that they somehow earned.
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