Tuesday, April 30, 2013

State Run Lotteries--Scamming a Gullible Public?

"The love of money is a root of all kinds of ignorant behavior."
              (paraphrase of  I Timothy 6:10a

Front page coverage of a Timberville woman winning a $2 million jackpot last week is sure to result in even more people buying Powerball tickets.

To add to the hype, the Daily News-Record story quotes someone from the Virginia Lottery as saying "Powerball has been hot in Virginia recently," citing examples of five $1 million wins and one $217 million jackpot.

Is this the kind of message we ought to be sending our citizens? Or is state-sponsored gambling an example of truly bad public policy that preys on childish fantasies of gaining wealth without work? And does it unfairly punish those of us who are terrible at math, especially when it come to the concept of probability?

The simple fact is that the odds are always in favor of the house. Always. And this is especially and phenomenally true in the case of state run lotteries, as is obvious from the chart above.

This means, of course, that an incredibly huge majority of those who play will engage in a lifelong habit in which they will lose (waste) far more money than they will ever gain, and that only a tiny, tiny minority will ever benefit–and that at the expense of the rest of us who are dumb enough (and greedy enough?) to believe we may just be the exceptions to this general rule. As in the case of being struck by lightning, it's something that can happen, but the odds are infinitesimal, which means near zero.

Some justify this kind of gambling as being no different that investing money in insurance, mutual funds or in a business venture. But in those examples the chances of our improving our lives by such investments are substantially in our favor.

In the case of insurance, for example, what we gain is a guarantee of protection when and if something bad were to happen. Our premiums don't go into a pool where only a handful of people benefit--purely at random and for no legitimate reason.

Disagree with me if you wish, but I figure all the money I haven't spent in this kind of gambling has left me measurably better off. And even those who have won large sums have often ended up worse off, in the end, than those who didn't "win" at this sorry game.

But that's a theme for another blog.
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