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State lotteries transfer wealth out of needy communities, investigation finds

206 points by lxm 4y ago

bshepard 4y ago
There are, I believe, real prosocial possibilities in the lottery form: https://deepsocks.substack.com/p/nomophobia-and-the-future-of-social https://deepsocks.substack.com/p/nomophobia-and-the-future-o...
janandonly 4y ago
Lotteries are an extra tax on those that do not understand math and/or statistics.
wronglebowski 4y ago
Being raised in what I believe to be one of these communities this feels very true. In Pennsylvania this supposedly supports seniors, but seniors often are the ones gambling. The most frequent shops for selling lottery tickets are also tobacco stores. I find it hard to resist a scratch off from time to time myself. I don’t know what the solution is, I know it gives people hope and excitement. Even if they think it’s impossible to work themselves out of debt they hope they’ll “win big” one day keeps them going to an extent. It’s really just another version of the “Marshmallow Question” just with adults instead of kids. You could write it all down for them and spell it out, but to them the math wouldn’t work out.
- HWR_14 4y ago
  > I find it hard to resist a scratch off from time to time myself. As long as you aren't doing it to win but instead to enjoy yourself gambling, and you do it with disposable income, this is fine. Don't beat yourself up for enjoying something mathematically suboptimal. > Even if they think it’s impossible to work themselves out of debt they hope they’ll “win big” one day keeps them going to an extent. It’s really just another version of the “Marshmallow Question” On the contrary. With the Marshmallow Question, you know you'll be rewarded. In this situation you do not think you will be rewarded. If the Marshmallow Question was "do you want this Marshmallow, or do you want it thrown away", that would be a better example. At least, in the mind of the players > but to them the math wouldn’t work out. It's entirely possible the math doesn't work out. A negative EV is significant if we are playing a game where the purpose is to increase my bank balance, but it's entirely possible that for various reasons that doesn't apply IRL.
  - notjulianjaynes 4y ago
    >As long as you aren't doing it to win but instead to enjoy yourself gambling What exactly is there to enjoy about a scratch ticket beyond the hope of winning?
    - deleted 4y ago
      [deleted]
    - HWR_14 4y ago
      > What exactly is there to enjoy about a scratch ticket beyond the hope of winning? There's "buying it for the adrenaline rush of possibly winning, and scratching it hoping to win" and "buying it because you're due/you feel lucky/you really need the money". As long as you are buying the thrill of the chase and the occasional great feeling of winning, you're fine. It's an experience and comes out of that mental budget. If you're buying it because you really want or believe that $500 from the scratcher is coming to buy your baby new shoes, it's an issue. I hope that makes some sense. Basically, do you understand your EV is negative/realistic odds of winning are negligible but are buying it anyway?
  - Falkon1313 4y ago
    No. It's more like "Do you want one single marshmallow, which might bring you a few brief seconds of pleasure - in the unlikely chance that the dog doesn't eat it first or it doesn't get covered in ants first? Or would you rather have a one in a million chance of having as many marshmallows as you want, whenever you want, for the rest of your life, with no more worries about the dogs or ants because there'd be plenty for the dog and you would never have ants anymore?"
    - mrguyorama 4y ago
      Except the odds are never NEARLY as good as one in a million, and humans have a well documented inability to fairly judge odds and understand large numbers. Would the lottery be nearly as exciting for people if they had a genuine understanding for the statistics involved? I don't mean that they've seen the math, but that you can feel in your gut just how impossible it is to "win" the lottery
- landemva 4y ago
  > what the solution is No loss lottery run by local bank or credit union would be a good start. https://freakonomics.com/podcast/is-america-ready-for-a-no-lose-lottery-update https://freakonomics.com/podcast/is-america-ready-for-a-no-l... https://pooltogether.com https://pooltogether.com
  - yawnr 4y ago
    Yotta does this in an FDIC insured account btw
kingkawn 4y ago
I remember when my friend’s neglectful abusive father won a million dollars in the lotto and my friend said, “there is no God.”
- Entinel 4y ago
  If it makes your friend feel better, lottery winners more often than not destroy their own lives.
  - kingkawn 4y ago
    Yeah in this case his son’s life
david2ndaccount 4y ago
The argument for the state having a monopoly on lotteries is that if there wasn’t a legal lottery illegal lotteries would proliferate. Thus to protect people, the state should run it as it would then be guaranteed to be fair and free of the criminal element (mobsters, etc.). Ideally, the lotto would just take in enough to pay the winners and administrative expenses. However, most states have abused this monopoly and just see it as an alternative source of revenue, which turns it into a regressive tax. State lotteries should be small, should not be advertised and should not be sources of revenue for the state.
- grubbs 4y ago
  The commercials I see here for the DC/VA lottery are quite disgusting. I'm "kind of" fine with the state running it. But they should not be advertising on TV.
  - aaomidi 4y ago
    Yep. They use dark patterns and FOMO to push people.
  - ISL 4y ago
    Washington State Lottery has a slogan, "It's good to play!" It really should be, "Playing the lottery is a pretty terrible idea and we're going to, on average, take your money. If you still want to play, fine, but cheeseburgers really are better than lottery tickets. Wealthy people got wealthy by putting their money into index funds and savings accounts."
    - FredPret 4y ago
      ... or running lotteries
      - ISL 4y ago
        Touché! Washington State Lottery, "It's good to take your money!"
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ddtaylor 4y ago
In some places the local state lotteries are called the "dummy tax"
- sircastor 4y ago
  I had a friend describe state lotteries as a tax on people who can’t do math.
- witheld 4y ago
  Well based on this it should probably be rebranded a “desperation tax”
  - 0xMatt 4y ago
    - Sebguer 4y ago
      Because desperate people don't make rational decisions.
  - MonkeyMalarky 4y ago
  - Tozen 4y ago
    Exactly. It's not a situation of well off people going somewhere to spend extra cash, as it is exploiting desperate people hoping to find some miracle to escape their circumstances, by shoving a negative vice in front of them.
- mullingitover 4y ago
  I think of it as taxing hope.
- dillondoyle 4y ago
  I can't be the only one here who buys them. I make good money. They're only $2. The 5 minutes I spend walking to the office after buying one spent thinking about what I would do with ___ is worth it. Yes, I know the math and am under no delusion about winning. I'm more likely to die trying to avoid the shitty drivers on this walk. It's day dream entertainment!
basilgohar 4y ago
This is true as is the nature of "food deserts" in the poorer neighbors, at least where I live – there are higher concentrations of convenience stores, drive-thrus, and gas stations that feature items like tobacco products, alcohol, and lottery tickets that similarly exploit the local populations impulse purchases and eat up what little income they earn from two or more low-paying jobs. It's viciously cyclical and those sin-taxed items all promote bad habits, harm physical, mental, and spiritual health, and perpetuate check-to-check living and discourage savings. It makes sense to me because many folks in these communities rely on public transit and/or walk to where they need to go, so they buy from what's available. This is the dark side of liberty where we see that people do not always choose the best options from those available to them when impulse buys are offered , or sometimes, there is far less to choose from for certain populations to begin with. I recognize I'm oversimplifying and probably have committed more than a few gross stereotypical statements, but I am distressed to see the conditions in a lot of these neighbors, not for me, but because of what I imagine it must be like for a lot of folks who don't have the same opportunities to rise up simply due to the circumstances of their birth. There is absolutely no good in the lottery and it should be abolished. Any alleged good for education or other programs is more than countered by the harm it does to the lower income populations. Education should be paid for from taxes, and just raise taxes if necessary. My guess is that the money that comes from lotteries don't usually end-up benefiting that much.
- pm90 4y ago
  Honestly its so much wasted human capacity. Its not even the case that we don’t have enough: there’s enough food to adequately feed everyone. Its a logistical problem and when markets are left to their own they will obviously lead to situations where only the cheapest products win out (not the most nutritious).
  - landemva 4y ago
    > lead to situations where only the cheapest products win out (not the most nutritious). Vending machine owners stock what sells. People vote with their dollars and their attention. We are free to choose what we eat, and free to throw out the TV. Most enjoy watching the 'breaking news' propaganda rather than putting in some effort to cook a simple meal at home. Your body, your choice.
nemo44x 4y ago
- somehnguy 4y ago
  If it's so wrong - what's your reasoning for why such neighborhoods end up the way they are?
  - iudqnolq 4y ago
    Not OP, I'd say the answer is lottery spend is less irrational than you think. A dream you know deep down will never happen might be more satisfying than a candy bar. So I think the solution is to subsidize and tweak the parameters: https://news.ycombinator.com/item?id=32065211 https://news.ycombinator.com/item?id=32065211
  - nemo44x 4y ago
    Because poverty strips any aspiration for the future because you become hopeless. Little pleasures like a cigarette or dream of winning make you feel good for a short period.
conciliatory 4y ago
It’s honestly shocking how many facets of American culture are predicated on addiction for profit. Alcohol, food, social media, gaming, opioids, cannabis, nicotine, gambling. It is extraordinarily difficult to find a sense of perspective independent of the influence of these industries.
- bogomipz 4y ago
  It's pretty amazing how the states are in the business of: booze, tobacco, weed, gambling and gas Imagine what the total revenue from just those 5 things is? It's got to be like printing cash and yet in most states and cities across the US have crumbling infrastructure, failing schools, underfunded pensions and budget deficits. This is in addition to all their other more regular tax regimes. Where does the money go?
  - Rury 4y ago
    It's not as much as you'd think. For Illinois, lottery alone nets something like $3 billion, of which ~$700-750 million goes to funding public schools. Public schools expenditures are ~$35 Billion/year. So, less than 1/35th of costs. Add in the alcohol, tobacco, weed, gambling taxes, and you still not even close to covering half the state's school expenditures. Granted, Illinois is perhaps the most fiscally screwed state, so might not be best example...
    - bogomipz 4y ago
      >"Public schools expenditures are ~$35 Billion/year." That all appears way off. "This year, the governor plans to increase the state’s education general fund by $498.1 million — a 5.4% increase — for an overall budget of $9.7 billion."[1] Additionally the Illinois state gas tax which is the second highest in the US is 40 cents a gallon.[2][3] [1] https://chicago.chalkbeat.org/2022/2/2/22914634/pritzker-proposes-increase-to-education-funding-in-2023-budget https://chicago.chalkbeat.org/2022/2/2/22914634/pritzker-pro... [2] https://www.axios.com/local/chicago/2022/03/22/illinois-gas-taxes-among-highest-in-nation https://www.axios.com/local/chicago/2022/03/22/illinois-gas-... [3] https://www.illinoispolicy.org/illinois-2nd-highest-gas-taxes-drive-motorists-business-across-state-lines/ https://www.illinoispolicy.org/illinois-2nd-highest-gas-taxe...
absherwin 4y ago
There's a simple answer: Offer a lottery with a high payout rate and flatten jackpots to the extent they don't cause a shift into other worse sorts of gambling. The total amount of money transferred to support government programs makes up less than 0.5% of total government revenue; it's trivially replaceable.
- rhacker 4y ago
  play 1000 times, probably win $1000.
- bogomipz 4y ago
  >"Offer a lottery with a high payout rate and flatten jackpots to the extent they don't cause a shift into other worse sorts of gambling" What is meant here by "flattening" jackpots? And how does it help?
  - HWR_14 4y ago
    > What is meant here by "flattening" jackpots? And how does it help? Instead of 1 in 300,000,000 chance of astronomical money make it 1 in 50,000 of getting a new car or similar. I'm not sure why it helps. I guess there are more (but smaller) winners, which the poster thought was better.
    - desmosxxx 4y ago
      I assume that would reduce lottery proceeds significantly so is a nonstarter. I know the numbers, but I'm not so sure it's always illogical (in a human/emotional sense) and you get quite a bit if middle class people playing when the payouts are significant. YOLO
  - Spooky23 4y ago
    Ireland has/had an interesting system where they sell bonds where the interest is paid like a sweepstakes. It’s like buying into a raffle, except you can get your money out.
iudqnolq 4y ago
There's an interesting theory that the solution to this is to subsidize the lottery and improve the odds significantly. Take to the extreme and you could essentially implement UBI this way. I also don't think poor people are wrong to think a chance of getting a life-changing amount of money is a worthwhile luxury spend compared to the other available options. They may be wrong about the probability, but instead of fixing that with education, we could fix it by making the probability closer to people's intuition. Given the well-known issues with means testing, randomly assigning the payouts instead might be a significant improvement.
- hetspookjee 4y ago
  I am very skeptic of this theory as a lot winners of lottery’s end up in enormous debt after few years due to horrible mismanagement of their funds. Why take this odd route and not just directly implement UBI if that is the goal?
  - iudqnolq 4y ago
    That's a serious issue, but I think it's mostly caused by the long-term impact of poverty both socially and neurologically. If you grow up worrying about money you often learn instincts that screw you over if you luck out. My uninformed guess underlying this is that making the payouts smaller and more frequent would solve this. First off, people would grow up in better communities. Second, I think if the payout wasn't advertised as "retire for life and be a rich person" people would face less social pressure to shower friends and family in gifts. I think given no constraints giving everyone $1,000/month is best, but I think there's a fair argument giving 1/1000 people $1000/month (and alternating) is better than giving everyone $100/month.
  - Mountain_Skies 4y ago
    The "where are they now" stories have been getting more positive over the years. It seems like more of the winners are middle to upper middle class and also awareness of the curse of past lottery winners has made winners more aware that they need a plan so they don't end up penniless a few years down the road.
- 4y ago
mc32 4y ago
Question is, before states implemented legalized lotteries, where did people spend this money? Bookies, horses, craps, betting pools at work, smokey card houses, gambling parlors? Do we make all this illegal, put alcohol, tobacco, prostitution, pro sports and weed into that bucket too. All unnecessary and transfer wealth. On the other hand, yeah, I'm not sure the argument by the state that hey, it's vice, we'll regulate it and hand the profits over to schools (etc.) is an honest one. Often they dip into the fund for unrelated things.
- bombcar 4y ago
  I suspect some did, some will always find a way. But all those things take time and effort to access; the lottery is literally available at every gas station in the nation, and most grocery stores, etc.
llip 4y ago
I saw someone suggest better odds and smaller jackpots. That isn’t a solution, win $1000 and $1000 is going to buy crack or similar.
- throwawaysleep 4y ago
  Yeah. These people have demonstrated a willingness to throw money into a garbage bin. If you play the lottery and are poor, I want the government managing as much of your spending as possible.
mullingitover 4y ago
Georgia's lottery[1] is overall a pretty decent system, all things considered. > the lottery takes in over US$1 billion yearly. By law, half of the money goes to prizes, one-third to education, and the remainder to operating and marketing the lottery It pours massive amounts of money into Georgia's education system. It's not perfect but it has put hundreds of thousands of students through school. If we must transfer wealth out of needy communities I can thing of worse places to put it than into education. [1] https://en.wikipedia.org/wiki/Georgia_Lottery https://en.wikipedia.org/wiki/Georgia_Lottery
- dymk 4y ago
  Well, they're ranked 26th in education, so at best it's just not the worst it could be
  - jlarocco 4y ago
    That seems overly negative, to me. Being 26th makes them average, and they get to use the money that other states use for education on other things, or lower taxes.
    - dymk 4y ago
      They're heavily subsidized by coastal blue states and they're still 50th percentile.
      - mullingitover 4y ago
        Georgia isn't heavily subsidized (unlike most states in the region), they actually rank 36th in federal dependency[1]. Maine, Connecticut, Pennsylvania, and Rhode Island all rank higher on federal dependency. [1] https://www.moneygeek.com/living/states-most-reliant-federal-government/ https://www.moneygeek.com/living/states-most-reliant-federal...
        jlarocco 4y ago
femto 4y ago
It's true of gambling in general. A case study is the state of New South Wales in Australia: the state with the most poker (slot) machines per capita [1], in the country with he most poker machines per capita [2] (excluding gambling specific destinations such as Macau and Monaco). One poker machine in NSW for every 82 people, with an average loss of AU$1000 per adult per year. The losses (called profit for the hotels and clubs) are heavily skewed toward lower income local government areas [3]: a loss of about $AU2500 per adult per year. Considering that not everyone gambles the losses are even bigger for those who do gamble. Granted an unknown amount of these losses are "business costs" for money launderers [4], but the damage to the community is still there from the associated crime. [1] https://theconversation.com/three-charts-on-australias-addiction-to-poker-machines-78353 https://theconversation.com/three-charts-on-australias-addic... [2] https://www.australianethical.com.au/blog/australia-needs-to-kick-its-pokies-addiction/ https://www.australianethical.com.au/blog/australia-needs-to... [3] https://chetre.org/2020/10/barriers-enablers-policy-gambling-harm-nsw/ https://chetre.org/2020/10/barriers-enablers-policy-gambling... [4] https://www.abc.net.au/news/2022-04-10/nsw-crime-commission-inquiry-into-pokies-money-laundering/100977954 https://www.abc.net.au/news/2022-04-10/nsw-crime-commission-...
- josephg 4y ago
  The "You Can't Ask That" episode on gambling in Australia was a massive eye-opener for me. They interview a bunch of people who are lifetime gambling addicts. Its shocking how badly its ruined their lives. I have no idea how many people who gamble regularly have a problem with it; but I'd support banning gambling entirely. https://iview.abc.net.au/show/you-can-t-ask-that/series/2/video/LE1617H010S00 https://iview.abc.net.au/show/you-can-t-ask-that/series/2/vi... (Does iView work outside Australia?)
  - speakfreely 4y ago
    > but I'd support banning gambling entirely If this was possible, that would be great. But you cannot eliminate a service where there is sufficient demand. You can only drive them underground, which frequently cause worse externalities for society than the original things being banned (drugs, prohibition-era alcohol ban, prostitution).
ConstantVigil 4y ago
Yet more evidence that lotteries and other forms of gambling really are just a stupid/desperate person tax.
xoa 4y ago
"Sin taxes" on self destructive behavior and officially run regulated versions of things which are infeasible to reasonably ban (and the black market "cure" would be worse then the disease) can often be reasonably justified. But every single last one of them should always be completely revenue neutral. All money should be divided amongst the state's residents and sent right back without exception. There's clearly been a long standing temptation to give into the argument of "we'll use this money to make up for the negative effects" but in practice anything that feeds into the general fund directly or indirectly creates perverse incentives that are just too dangerous. Government should take no direct financial interest in whether money from sin rises or falls to zero. That's a big missing piece in a lot of these systems, and the risk of dependence seems similar to that of fines which are often effectively "sin taxes" too. There a number of examples of places [0] which came to depend on fines as a significant source of revenue to run government and in turn took actions to increase the take to great destructive effect. ---- 0: https://www.forbes.com/sites/nicksibilla/2019/08/29/nearly-600-towns-get-10-of-their-budgets-or-more-from-court-fines/ https://www.forbes.com/sites/nicksibilla/2019/08/29/nearly-6...
throwawaysleep 4y ago
They evidently don’t consider themselves needy if their idea of entertainment is throwing money in a garbage bin. May as well be a state one that tries to educate kids out of such communities.
wly_cdgr 4y ago
No shit
eyelidlessness 4y ago
It’s a running joke, even among my lottery buying friends and fam, that the lottery is a poverty tax. It’s just not a very good joke.
jancsika 4y ago
You can actually increase your odds by choosing your own numbers: 1 2 3 4 5 6. Then all you do is convince everyone else playing to choose those numbers, too. No one wins, the jackpot rolls over, and game eventually[1] everybody wins at the same time. Together we can do it! 1: Warning: timeline to win may exceed humanity's existence.
- forgotloginonp4 4y ago
  A quick search reveals that this region of human activity is already well colonized by DAOs and NFTs.
hn_throwaway_99 4y ago
I'm curious, the article talks about the issue where a small number of, essentially, addicts, are responsible for a huge portion of total sales (10% of players are responsible for 2/3 of total revenue). I find this interesting because this pattern repeats in a number of different "potentially addictive" pursuits, where the pursuit can be a pleasant and welcome diversion when done in moderation, but is ruinous for addicts. For example, I love having a good glass of wine or two a couple times a week at dinner. But the alcohol industry would essentially collapse without alcoholics - a study in the UK found that 77% of alcohol was sold to problem drinkers - 30% to "harmful" drinkers (women who drink more that 36 and men more than 51 drinks a week) and 48% to "hazardous" drinkers (women 15-35 drinks a week and men 15-50 drinks a week). Similarly, I like blowing 5 bucks on the lottery whenever there is a huge jackpot (I can afford it and am basically just paying to fantasize about what I'd do with a couple hundred million), but apparently folks like me make up a relatively small proportion of lottery sales. So, I'm basically just wondering there is anything that can, or should, be done here. I'm assuming these distributions are what you'd always see in something that shows a power law distribution - the huge percentage of total sales is always from those with addictions because they indulge so much in the first place (related very interesting article: https://astralcodexten.substack.com/p/drug-users-use-a-lot-of-drugs https://astralcodexten.substack.com/p/drug-users-use-a-lot-o...).
- Falkon1313 4y ago
  Sure, that's easy. Consider where lotteries come from - everyone in the room puts their name in the hat and then one winner is drawn (or maybe also a 2nd prize and 3rd prize). But it's simple - 1 person, 1 chance. You just can't buy more in that system. So the 'problem gambler' that blows most of their paycheck on lottery tickets just isn't even possible. Maybe the limit doesn't need to be strictly 1, but even just having a limit, low enough to not be too much of a hardship even to a poverty-level person, would still be a simple solution. People sure wouldn't like it though. They'd immediately start working on ways to get around that limit. Same as they would if you limited them to only buying 1 6-pack of beer per week.
egberts1 4y ago
Number one problem with lottery, notably state-run variety, with multi-year payouts is the following: It is next to impossible to discontinue without any impact to your state budget. In short, it’s that giant sucking vortex of economic and a form of state-sanctioned, self-imposed addiction.
caymanjim 4y ago
There are plenty of people who get sucked into spending more than they can afford on the lottery, to be sure. For most people, it's cheap entertainment. They know they won't win, they understand the odds. They're not idiots or suckers. They're buying a cheap thrill. For a few bucks a week, they get some anticipation and fantasy. The big jackpot tickets are great. For $2 you get a harmless thrill, and you can have those fantasy what-if conversations. Scratchoffs are fun to do, and they offer a ton of small payouts. Everyone always mocks lottery players and assumes they're being duped, but most of them are just buying the only thrill they can afford. Beats crypto.
cat_plus_plus 4y ago
This really needed an investigation? Collecting money is the whole point and state monopoly ensures much bigger margins than casinos. The only good part is that's it's avoidable voluntary taxation.
999900000999 4y ago
I grew up poor, lotteries are 1000% entertainment. No one is stupid enough to really think they'll win. It's a fun shared moment, like watching football.
Tozen 4y ago
Not at all surprised that these state lotteries in America are taking advantage of poor Black people. It's just another demonstration of how various exploitative systems are put in place for such purposes, like the school-to-prison pipeline, then the pretense by the creators or those profiting from it that they don't know or understand what is going on. It is also "funny" how after generating so much money from those poor Black neighborhoods, how little the percentage of that money ever goes back to them. The states involved could very much legislate that a percentage of profits (and at what percentages) have to be shown benefiting the poor neighborhoods they are exploiting. But, we all know such problems will not be fixed (despite being exposed by the media), unless forced to and they will be fighting against it at every step.
anm89 4y ago
Did anyone ever think otherwise?
kornhole 4y ago
Lottery is a tax on people who don't understand probabilities and those who need something to hope for. Basically it taxes the poor. It makes many of these already poor people poorer and a very few richer. This has been known for decades or more. The results of the investigation are consistent and no surprise.
tiku 4y ago
Selling hope. I've read somewhere that it is tax on the poor, since then I've stopped playing the lottery.
thayne 4y ago
Is that surprising?
sam-s 4y ago
1. Lotteries are not taxes because the participation is voluntary (unlike the soviet lottery/got's bond combo). 2. People buy lottery tickets just like they buy movie tickets - it is a form of _entertainment_. They heard many times that they should not expect to win - just like they heard many times that what they see on the silver screen is not real. Nevertheless they keep dreaming.
main3523 4y ago
LincolnPaige 4y ago

206 points by lxm 4y ago

There are, I believe, real prosocial possibilities in the lottery form: https://deepsocks.substack.com/p/nomophobia-and-the-future-of-social https://deepsocks.substack.com/p/nomophobia-and-the-future-o...

janandonly 4y ago

Lotteries are an extra tax on those that do not understand math and/or statistics.

wronglebowski 4y ago

Being raised in what I believe to be one of these communities this feels very true. In Pennsylvania this supposedly supports seniors, but seniors often are the ones gambling. The most frequent shops for selling lottery tickets are also tobacco stores. I find it hard to resist a scratch off from time to time myself. I don’t know what the solution is, I know it gives people hope and excitement. Even if they think it’s impossible to work themselves out of debt they hope they’ll “win big” one day keeps them going to an extent. It’s really just another version of the “Marshmallow Question” just with adults instead of kids. You could write it all down for them and spell it out, but to them the math wouldn’t work out.

HWR_14 4y ago
> I find it hard to resist a scratch off from time to time myself. As long as you aren't doing it to win but instead to enjoy yourself gambling, and you do it with disposable income, this is fine. Don't beat yourself up for enjoying something mathematically suboptimal. > Even if they think it’s impossible to work themselves out of debt they hope they’ll “win big” one day keeps them going to an extent. It’s really just another version of the “Marshmallow Question” On the contrary. With the Marshmallow Question, you know you'll be rewarded. In this situation you do not think you will be rewarded. If the Marshmallow Question was "do you want this Marshmallow, or do you want it thrown away", that would be a better example. At least, in the mind of the players > but to them the math wouldn’t work out. It's entirely possible the math doesn't work out. A negative EV is significant if we are playing a game where the purpose is to increase my bank balance, but it's entirely possible that for various reasons that doesn't apply IRL.
- notjulianjaynes 4y ago
  >As long as you aren't doing it to win but instead to enjoy yourself gambling What exactly is there to enjoy about a scratch ticket beyond the hope of winning?
  - deleted 4y ago
    [deleted]
  - HWR_14 4y ago
    > What exactly is there to enjoy about a scratch ticket beyond the hope of winning? There's "buying it for the adrenaline rush of possibly winning, and scratching it hoping to win" and "buying it because you're due/you feel lucky/you really need the money". As long as you are buying the thrill of the chase and the occasional great feeling of winning, you're fine. It's an experience and comes out of that mental budget. If you're buying it because you really want or believe that $500 from the scratcher is coming to buy your baby new shoes, it's an issue. I hope that makes some sense. Basically, do you understand your EV is negative/realistic odds of winning are negligible but are buying it anyway?
- Falkon1313 4y ago
  No. It's more like "Do you want one single marshmallow, which might bring you a few brief seconds of pleasure - in the unlikely chance that the dog doesn't eat it first or it doesn't get covered in ants first? Or would you rather have a one in a million chance of having as many marshmallows as you want, whenever you want, for the rest of your life, with no more worries about the dogs or ants because there'd be plenty for the dog and you would never have ants anymore?"
  - mrguyorama 4y ago
    Except the odds are never NEARLY as good as one in a million, and humans have a well documented inability to fairly judge odds and understand large numbers. Would the lottery be nearly as exciting for people if they had a genuine understanding for the statistics involved? I don't mean that they've seen the math, but that you can feel in your gut just how impossible it is to "win" the lottery
landemva 4y ago
> what the solution is No loss lottery run by local bank or credit union would be a good start. https://freakonomics.com/podcast/is-america-ready-for-a-no-lose-lottery-update https://freakonomics.com/podcast/is-america-ready-for-a-no-l... https://pooltogether.com https://pooltogether.com
- yawnr 4y ago
  Yotta does this in an FDIC insured account btw

kingkawn 4y ago

I remember when my friend’s neglectful abusive father won a million dollars in the lotto and my friend said, “there is no God.”

Entinel 4y ago
If it makes your friend feel better, lottery winners more often than not destroy their own lives.
- kingkawn 4y ago
  Yeah in this case his son’s life

david2ndaccount 4y ago

The argument for the state having a monopoly on lotteries is that if there wasn’t a legal lottery illegal lotteries would proliferate. Thus to protect people, the state should run it as it would then be guaranteed to be fair and free of the criminal element (mobsters, etc.). Ideally, the lotto would just take in enough to pay the winners and administrative expenses. However, most states have abused this monopoly and just see it as an alternative source of revenue, which turns it into a regressive tax. State lotteries should be small, should not be advertised and should not be sources of revenue for the state.

grubbs 4y ago
The commercials I see here for the DC/VA lottery are quite disgusting. I'm "kind of" fine with the state running it. But they should not be advertising on TV.
- aaomidi 4y ago
  Yep. They use dark patterns and FOMO to push people.
- ISL 4y ago
  Washington State Lottery has a slogan, "It's good to play!" It really should be, "Playing the lottery is a pretty terrible idea and we're going to, on average, take your money. If you still want to play, fine, but cheeseburgers really are better than lottery tickets. Wealthy people got wealthy by putting their money into index funds and savings accounts."
  - FredPret 4y ago
    ... or running lotteries
    - ISL 4y ago
      Touché! Washington State Lottery, "It's good to take your money!"

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ddtaylor 4y ago

In some places the local state lotteries are called the "dummy tax"

sircastor 4y ago
I had a friend describe state lotteries as a tax on people who can’t do math.
witheld 4y ago
Well based on this it should probably be rebranded a “desperation tax”
- 0xMatt 4y ago
  - Sebguer 4y ago
    Because desperate people don't make rational decisions.
- MonkeyMalarky 4y ago
- Tozen 4y ago
  Exactly. It's not a situation of well off people going somewhere to spend extra cash, as it is exploiting desperate people hoping to find some miracle to escape their circumstances, by shoving a negative vice in front of them.
mullingitover 4y ago
I think of it as taxing hope.
dillondoyle 4y ago
I can't be the only one here who buys them. I make good money. They're only $2. The 5 minutes I spend walking to the office after buying one spent thinking about what I would do with ___ is worth it. Yes, I know the math and am under no delusion about winning. I'm more likely to die trying to avoid the shitty drivers on this walk. It's day dream entertainment!

basilgohar 4y ago

This is true as is the nature of "food deserts" in the poorer neighbors, at least where I live – there are higher concentrations of convenience stores, drive-thrus, and gas stations that feature items like tobacco products, alcohol, and lottery tickets that similarly exploit the local populations impulse purchases and eat up what little income they earn from two or more low-paying jobs. It's viciously cyclical and those sin-taxed items all promote bad habits, harm physical, mental, and spiritual health, and perpetuate check-to-check living and discourage savings. It makes sense to me because many folks in these communities rely on public transit and/or walk to where they need to go, so they buy from what's available. This is the dark side of liberty where we see that people do not always choose the best options from those available to them when impulse buys are offered , or sometimes, there is far less to choose from for certain populations to begin with. I recognize I'm oversimplifying and probably have committed more than a few gross stereotypical statements, but I am distressed to see the conditions in a lot of these neighbors, not for me, but because of what I imagine it must be like for a lot of folks who don't have the same opportunities to rise up simply due to the circumstances of their birth. There is absolutely no good in the lottery and it should be abolished. Any alleged good for education or other programs is more than countered by the harm it does to the lower income populations. Education should be paid for from taxes, and just raise taxes if necessary. My guess is that the money that comes from lotteries don't usually end-up benefiting that much.

pm90 4y ago
Honestly its so much wasted human capacity. Its not even the case that we don’t have enough: there’s enough food to adequately feed everyone. Its a logistical problem and when markets are left to their own they will obviously lead to situations where only the cheapest products win out (not the most nutritious).
- landemva 4y ago
  > lead to situations where only the cheapest products win out (not the most nutritious). Vending machine owners stock what sells. People vote with their dollars and their attention. We are free to choose what we eat, and free to throw out the TV. Most enjoy watching the 'breaking news' propaganda rather than putting in some effort to cook a simple meal at home. Your body, your choice.

nemo44x 4y ago

somehnguy 4y ago
If it's so wrong - what's your reasoning for why such neighborhoods end up the way they are?
- iudqnolq 4y ago
  Not OP, I'd say the answer is lottery spend is less irrational than you think. A dream you know deep down will never happen might be more satisfying than a candy bar. So I think the solution is to subsidize and tweak the parameters: https://news.ycombinator.com/item?id=32065211 https://news.ycombinator.com/item?id=32065211
- nemo44x 4y ago
  Because poverty strips any aspiration for the future because you become hopeless. Little pleasures like a cigarette or dream of winning make you feel good for a short period.

conciliatory 4y ago

It’s honestly shocking how many facets of American culture are predicated on addiction for profit. Alcohol, food, social media, gaming, opioids, cannabis, nicotine, gambling. It is extraordinarily difficult to find a sense of perspective independent of the influence of these industries.

bogomipz 4y ago
It's pretty amazing how the states are in the business of: booze, tobacco, weed, gambling and gas Imagine what the total revenue from just those 5 things is? It's got to be like printing cash and yet in most states and cities across the US have crumbling infrastructure, failing schools, underfunded pensions and budget deficits. This is in addition to all their other more regular tax regimes. Where does the money go?
- Rury 4y ago
  It's not as much as you'd think. For Illinois, lottery alone nets something like $3 billion, of which ~$700-750 million goes to funding public schools. Public schools expenditures are ~$35 Billion/year. So, less than 1/35th of costs. Add in the alcohol, tobacco, weed, gambling taxes, and you still not even close to covering half the state's school expenditures. Granted, Illinois is perhaps the most fiscally screwed state, so might not be best example...
  - bogomipz 4y ago
    >"Public schools expenditures are ~$35 Billion/year." That all appears way off. "This year, the governor plans to increase the state’s education general fund by $498.1 million — a 5.4% increase — for an overall budget of $9.7 billion."[1] Additionally the Illinois state gas tax which is the second highest in the US is 40 cents a gallon.[2][3] [1] https://chicago.chalkbeat.org/2022/2/2/22914634/pritzker-proposes-increase-to-education-funding-in-2023-budget https://chicago.chalkbeat.org/2022/2/2/22914634/pritzker-pro... [2] https://www.axios.com/local/chicago/2022/03/22/illinois-gas-taxes-among-highest-in-nation https://www.axios.com/local/chicago/2022/03/22/illinois-gas-... [3] https://www.illinoispolicy.org/illinois-2nd-highest-gas-taxes-drive-motorists-business-across-state-lines/ https://www.illinoispolicy.org/illinois-2nd-highest-gas-taxe...

absherwin 4y ago

There's a simple answer: Offer a lottery with a high payout rate and flatten jackpots to the extent they don't cause a shift into other worse sorts of gambling. The total amount of money transferred to support government programs makes up less than 0.5% of total government revenue; it's trivially replaceable.

rhacker 4y ago
play 1000 times, probably win $1000.
bogomipz 4y ago
>"Offer a lottery with a high payout rate and flatten jackpots to the extent they don't cause a shift into other worse sorts of gambling" What is meant here by "flattening" jackpots? And how does it help?
- HWR_14 4y ago
  > What is meant here by "flattening" jackpots? And how does it help? Instead of 1 in 300,000,000 chance of astronomical money make it 1 in 50,000 of getting a new car or similar. I'm not sure why it helps. I guess there are more (but smaller) winners, which the poster thought was better.
  - desmosxxx 4y ago
    I assume that would reduce lottery proceeds significantly so is a nonstarter. I know the numbers, but I'm not so sure it's always illogical (in a human/emotional sense) and you get quite a bit if middle class people playing when the payouts are significant. YOLO
- Spooky23 4y ago
  Ireland has/had an interesting system where they sell bonds where the interest is paid like a sweepstakes. It’s like buying into a raffle, except you can get your money out.

iudqnolq 4y ago

There's an interesting theory that the solution to this is to subsidize the lottery and improve the odds significantly. Take to the extreme and you could essentially implement UBI this way. I also don't think poor people are wrong to think a chance of getting a life-changing amount of money is a worthwhile luxury spend compared to the other available options. They may be wrong about the probability, but instead of fixing that with education, we could fix it by making the probability closer to people's intuition. Given the well-known issues with means testing, randomly assigning the payouts instead might be a significant improvement.

hetspookjee 4y ago
I am very skeptic of this theory as a lot winners of lottery’s end up in enormous debt after few years due to horrible mismanagement of their funds. Why take this odd route and not just directly implement UBI if that is the goal?
- iudqnolq 4y ago
  That's a serious issue, but I think it's mostly caused by the long-term impact of poverty both socially and neurologically. If you grow up worrying about money you often learn instincts that screw you over if you luck out. My uninformed guess underlying this is that making the payouts smaller and more frequent would solve this. First off, people would grow up in better communities. Second, I think if the payout wasn't advertised as "retire for life and be a rich person" people would face less social pressure to shower friends and family in gifts. I think given no constraints giving everyone $1,000/month is best, but I think there's a fair argument giving 1/1000 people $1000/month (and alternating) is better than giving everyone $100/month.
- Mountain_Skies 4y ago
  The "where are they now" stories have been getting more positive over the years. It seems like more of the winners are middle to upper middle class and also awareness of the curse of past lottery winners has made winners more aware that they need a plan so they don't end up penniless a few years down the road.
4y ago

mc32 4y ago

Question is, before states implemented legalized lotteries, where did people spend this money? Bookies, horses, craps, betting pools at work, smokey card houses, gambling parlors? Do we make all this illegal, put alcohol, tobacco, prostitution, pro sports and weed into that bucket too. All unnecessary and transfer wealth. On the other hand, yeah, I'm not sure the argument by the state that hey, it's vice, we'll regulate it and hand the profits over to schools (etc.) is an honest one. Often they dip into the fund for unrelated things.

bombcar 4y ago
I suspect some did, some will always find a way. But all those things take time and effort to access; the lottery is literally available at every gas station in the nation, and most grocery stores, etc.

llip 4y ago

I saw someone suggest better odds and smaller jackpots. That isn’t a solution, win $1000 and $1000 is going to buy crack or similar.

throwawaysleep 4y ago
Yeah. These people have demonstrated a willingness to throw money into a garbage bin. If you play the lottery and are poor, I want the government managing as much of your spending as possible.

mullingitover 4y ago

Georgia's lottery[1] is overall a pretty decent system, all things considered. > the lottery takes in over US$1 billion yearly. By law, half of the money goes to prizes, one-third to education, and the remainder to operating and marketing the lottery It pours massive amounts of money into Georgia's education system. It's not perfect but it has put hundreds of thousands of students through school. If we must transfer wealth out of needy communities I can thing of worse places to put it than into education. [1] https://en.wikipedia.org/wiki/Georgia_Lottery https://en.wikipedia.org/wiki/Georgia_Lottery

dymk 4y ago
Well, they're ranked 26th in education, so at best it's just not the worst it could be
- jlarocco 4y ago
  That seems overly negative, to me. Being 26th makes them average, and they get to use the money that other states use for education on other things, or lower taxes.
  - dymk 4y ago
    They're heavily subsidized by coastal blue states and they're still 50th percentile.
    - mullingitover 4y ago
      Georgia isn't heavily subsidized (unlike most states in the region), they actually rank 36th in federal dependency[1]. Maine, Connecticut, Pennsylvania, and Rhode Island all rank higher on federal dependency. [1] https://www.moneygeek.com/living/states-most-reliant-federal-government/ https://www.moneygeek.com/living/states-most-reliant-federal...
      - jlarocco 4y ago

femto 4y ago

It's true of gambling in general. A case study is the state of New South Wales in Australia: the state with the most poker (slot) machines per capita [1], in the country with he most poker machines per capita [2] (excluding gambling specific destinations such as Macau and Monaco). One poker machine in NSW for every 82 people, with an average loss of AU$1000 per adult per year. The losses (called profit for the hotels and clubs) are heavily skewed toward lower income local government areas [3]: a loss of about $AU2500 per adult per year. Considering that not everyone gambles the losses are even bigger for those who do gamble. Granted an unknown amount of these losses are "business costs" for money launderers [4], but the damage to the community is still there from the associated crime. [1] https://theconversation.com/three-charts-on-australias-addiction-to-poker-machines-78353 https://theconversation.com/three-charts-on-australias-addic... [2] https://www.australianethical.com.au/blog/australia-needs-to-kick-its-pokies-addiction/ https://www.australianethical.com.au/blog/australia-needs-to... [3] https://chetre.org/2020/10/barriers-enablers-policy-gambling-harm-nsw/ https://chetre.org/2020/10/barriers-enablers-policy-gambling... [4] https://www.abc.net.au/news/2022-04-10/nsw-crime-commission-inquiry-into-pokies-money-laundering/100977954 https://www.abc.net.au/news/2022-04-10/nsw-crime-commission-...

josephg 4y ago
The "You Can't Ask That" episode on gambling in Australia was a massive eye-opener for me. They interview a bunch of people who are lifetime gambling addicts. Its shocking how badly its ruined their lives. I have no idea how many people who gamble regularly have a problem with it; but I'd support banning gambling entirely. https://iview.abc.net.au/show/you-can-t-ask-that/series/2/video/LE1617H010S00 https://iview.abc.net.au/show/you-can-t-ask-that/series/2/vi... (Does iView work outside Australia?)
- speakfreely 4y ago
  > but I'd support banning gambling entirely If this was possible, that would be great. But you cannot eliminate a service where there is sufficient demand. You can only drive them underground, which frequently cause worse externalities for society than the original things being banned (drugs, prohibition-era alcohol ban, prostitution).

ConstantVigil 4y ago

Yet more evidence that lotteries and other forms of gambling really are just a stupid/desperate person tax.

xoa 4y ago

"Sin taxes" on self destructive behavior and officially run regulated versions of things which are infeasible to reasonably ban (and the black market "cure" would be worse then the disease) can often be reasonably justified. But every single last one of them should always be completely revenue neutral. All money should be divided amongst the state's residents and sent right back without exception. There's clearly been a long standing temptation to give into the argument of "we'll use this money to make up for the negative effects" but in practice anything that feeds into the general fund directly or indirectly creates perverse incentives that are just too dangerous. Government should take no direct financial interest in whether money from sin rises or falls to zero. That's a big missing piece in a lot of these systems, and the risk of dependence seems similar to that of fines which are often effectively "sin taxes" too. There a number of examples of places [0] which came to depend on fines as a significant source of revenue to run government and in turn took actions to increase the take to great destructive effect. ---- 0: https://www.forbes.com/sites/nicksibilla/2019/08/29/nearly-600-towns-get-10-of-their-budgets-or-more-from-court-fines/ https://www.forbes.com/sites/nicksibilla/2019/08/29/nearly-6...

throwawaysleep 4y ago

They evidently don’t consider themselves needy if their idea of entertainment is throwing money in a garbage bin. May as well be a state one that tries to educate kids out of such communities.

wly_cdgr 4y ago

No shit

eyelidlessness 4y ago

It’s a running joke, even among my lottery buying friends and fam, that the lottery is a poverty tax. It’s just not a very good joke.

jancsika 4y ago

You can actually increase your odds by choosing your own numbers: 1 2 3 4 5 6. Then all you do is convince everyone else playing to choose those numbers, too. No one wins, the jackpot rolls over, and game eventually[1] everybody wins at the same time. Together we can do it! 1: Warning: timeline to win may exceed humanity's existence.

forgotloginonp4 4y ago
A quick search reveals that this region of human activity is already well colonized by DAOs and NFTs.

hn_throwaway_99 4y ago

I'm curious, the article talks about the issue where a small number of, essentially, addicts, are responsible for a huge portion of total sales (10% of players are responsible for 2/3 of total revenue). I find this interesting because this pattern repeats in a number of different "potentially addictive" pursuits, where the pursuit can be a pleasant and welcome diversion when done in moderation, but is ruinous for addicts. For example, I love having a good glass of wine or two a couple times a week at dinner. But the alcohol industry would essentially collapse without alcoholics - a study in the UK found that 77% of alcohol was sold to problem drinkers - 30% to "harmful" drinkers (women who drink more that 36 and men more than 51 drinks a week) and 48% to "hazardous" drinkers (women 15-35 drinks a week and men 15-50 drinks a week). Similarly, I like blowing 5 bucks on the lottery whenever there is a huge jackpot (I can afford it and am basically just paying to fantasize about what I'd do with a couple hundred million), but apparently folks like me make up a relatively small proportion of lottery sales. So, I'm basically just wondering there is anything that can, or should, be done here. I'm assuming these distributions are what you'd always see in something that shows a power law distribution - the huge percentage of total sales is always from those with addictions because they indulge so much in the first place (related very interesting article: https://astralcodexten.substack.com/p/drug-users-use-a-lot-of-drugs https://astralcodexten.substack.com/p/drug-users-use-a-lot-o...).

Falkon1313 4y ago
Sure, that's easy. Consider where lotteries come from - everyone in the room puts their name in the hat and then one winner is drawn (or maybe also a 2nd prize and 3rd prize). But it's simple - 1 person, 1 chance. You just can't buy more in that system. So the 'problem gambler' that blows most of their paycheck on lottery tickets just isn't even possible. Maybe the limit doesn't need to be strictly 1, but even just having a limit, low enough to not be too much of a hardship even to a poverty-level person, would still be a simple solution. People sure wouldn't like it though. They'd immediately start working on ways to get around that limit. Same as they would if you limited them to only buying 1 6-pack of beer per week.

egberts1 4y ago

Number one problem with lottery, notably state-run variety, with multi-year payouts is the following: It is next to impossible to discontinue without any impact to your state budget. In short, it’s that giant sucking vortex of economic and a form of state-sanctioned, self-imposed addiction.

caymanjim 4y ago

There are plenty of people who get sucked into spending more than they can afford on the lottery, to be sure. For most people, it's cheap entertainment. They know they won't win, they understand the odds. They're not idiots or suckers. They're buying a cheap thrill. For a few bucks a week, they get some anticipation and fantasy. The big jackpot tickets are great. For $2 you get a harmless thrill, and you can have those fantasy what-if conversations. Scratchoffs are fun to do, and they offer a ton of small payouts. Everyone always mocks lottery players and assumes they're being duped, but most of them are just buying the only thrill they can afford. Beats crypto.

cat_plus_plus 4y ago

This really needed an investigation? Collecting money is the whole point and state monopoly ensures much bigger margins than casinos. The only good part is that's it's avoidable voluntary taxation.

999900000999 4y ago

I grew up poor, lotteries are 1000% entertainment. No one is stupid enough to really think they'll win. It's a fun shared moment, like watching football.

Tozen 4y ago

Not at all surprised that these state lotteries in America are taking advantage of poor Black people. It's just another demonstration of how various exploitative systems are put in place for such purposes, like the school-to-prison pipeline, then the pretense by the creators or those profiting from it that they don't know or understand what is going on. It is also "funny" how after generating so much money from those poor Black neighborhoods, how little the percentage of that money ever goes back to them. The states involved could very much legislate that a percentage of profits (and at what percentages) have to be shown benefiting the poor neighborhoods they are exploiting. But, we all know such problems will not be fixed (despite being exposed by the media), unless forced to and they will be fighting against it at every step.

anm89 4y ago

Did anyone ever think otherwise?

kornhole 4y ago

Lottery is a tax on people who don't understand probabilities and those who need something to hope for. Basically it taxes the poor. It makes many of these already poor people poorer and a very few richer. This has been known for decades or more. The results of the investigation are consistent and no surprise.

tiku 4y ago

Selling hope. I've read somewhere that it is tax on the poor, since then I've stopped playing the lottery.

thayne 4y ago

Is that surprising?

sam-s 4y ago

1. Lotteries are not taxes because the participation is voluntary (unlike the soviet lottery/got's bond combo). 2. People buy lottery tickets just like they buy movie tickets - it is a form of _entertainment_. They heard many times that they should not expect to win - just like they heard many times that what they see on the silver screen is not real. Nevertheless they keep dreaming.

main3523 4y ago

LincolnPaige 4y ago