Pressing your luck to try to win a giant lottery jackpot is a fun and exhilarating experience. And even though those odds are very (very) stacked against you, the odds of winning aren’t enough to stop Americans from spending a lot of money each year on a scratch-off or Powerball ticket.
But when jackpots can get as high as billions of dollars, how is it possible that Americans are still losing money? Let’s look at how much money Americans spend on lotto tickets and how much lottery revenue the government is making from your purchases from retailers.
Are the Odds in My Favor?
The main reason Americans lose money on lottery tickets is that the odds of winning are stacked against them. The chances of winning the Mega Millions jackpot is one in 302,575,350. You have a better chance of being struck by lightning 300 times.
So, when you buy a lottery ticket, you’re pretty much expecting not to win any money back. And according to the US Census Bureau, consumers spent over $71 billion on lottery ticket sales in 2017 alone. That’s a lot of money to spend when the odds are infinitesimal.
To give you an idea of how much is spent per state on the lottery in 2017, here is a quick list:
- Florida: $5.8 billion
- Massachusetts: $5.1 billion
- Georgia: $4 billion
- Pennsylvania: $3.7 billion
- New Jersey: $3 billion
- Illinois: $2.8 billion
- Ohio: $2.8 billion
- Connecticut: $1.1 billion
- New Hampshire: $287 million
Is the Lottery Addictive?
Another reason people can lose so much money on the lottery is because it can be addictive. Gambling can stimulate the brain’s reward system like drugs or alcohol, which can cause addictive habits.
Individuals with gambling addiction might be more likely to spend more of their household income on lottery tickets in a given period. Additionally, studies have found that lower-income individuals are likelier to be lottery players.
Even though they know the payouts are small and chances of winning are small, the dream and promise of a giant payout make them more likely to play often.
How Do People Use the Lottery Winnings?
When people win large sums of money from the lottery, you’d expect them to be set for life. But the problem is that many people do not sustainably use their newfound wealth.
Around one-third of lottery winners file bankruptcy after winning simply because many winners go overboard and struggle to maintain their personal finances. To combat this, it’s always a good idea to hire a financial advisor after winning or choose annuity payments rather than a lump sum.
Is the Lottery Prize Pool Split?
Another reason Americans are losing money when playing the lottery is that even when you win, you still lose a little bit. Lottery winnings are taxable in most states, so the amount you see isn’t the entire amount you’ll take home. You can generally expect to lose about 24 percent of winnings over $1,200 due to taxes in many states, including New York, Maryland, Texas, and Michigan.
The exceptions here are California and Delaware, which do not tax lottery winnings. So if you’re looking to win big, these states might be places to play. Six states do not have a lottery, including Alabama, Hawaii, Alaska, Nevada, Utah, and Mississippi.
A state lottery will also use a portion of lottery spending to fund infrastructure and other ventures to benefit the state. Every state uses lottery revenue for things like funding public schools, gambling addiction recovery, or even efforts to end homelessness.
Yotta: A New Way to Play
The lottery is a losing game, but it's sort of a no-lose situation when you’re saving money and entering to win tons of prizes. Yotta is an account that pays out interest in prizes of up to $10 million weekly. All you need to do is keep saving.
For every $25 you deposit, you earn one ticket each week to be entered to win prizes. You can’t lose. Get started today to make saving, managing, and spending your money a whole lot more fun.
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