Opinion: Lottery, like taxes, is a rip-off
As I write this column, the California Lottery Powerball jackpot is $540,000,000, the Mega Millions Lottery is $244,000,000, and the SuperLotto jackpot is $12,000,000. I haven’t purchased a ticket. In fact, I’ve never purchased a ticket. That’s not just because the odds of winning are millions of times worse than putting one’s chips on a number at the roulette wheel.
Understanding “odds” is tricky. On a roulette wheel, there are 36 positive numbers and zero. So, the odds of the ball landing on your number are 37 to 1. This may lead some people to think that, if they play the game 37 times, they will win at least once. Of course, that’s not true. People regularly play hundreds of times without ever winning, except in the movies or on TV.
The odds of winning the Powerball jackpot are 292,000,000 to one. Still millions of Californians will plunk down their money for a ticket with no reasonable chance of winning. The saddest part of this story is that it is those people who can least afford to gamble away their money who are most likely to purchase multiple tickets, believing that they are appreciably increasing their chances of winning. But a person with 100 different tickets is still facing odds of 29,200,000 to one of winning. That person would do better to go the Vegas, play roulette 100 times, maybe (and that’s a big maybe) win once, and only lose $74 instead of the whole $100.
I’ve never gambled on the Calfornia Lottery because I’ve never believed the propaganda that was used to sell Californians on the idea that a lottery was a good idea. We were told that passing the proposition would substantially fund our elementary and secondary schools. At the time, I was my college’s representative to the Academic Senate in Sacramento, and I had come to distrust the way decisions about our state were made from the Governor’s Office to the Legislature and down to county Boards of Supervisors.
Proposition 37’s official ballot summary said that it, “Amends Constitution to authorize establishment of a state lottery and to prohibit casinos. Adds statutes providing for establishment of a state-operated lottery. Of the total lottery revenues, requires that 50 percent be returned as prizes, not more than 16 percent be used for expenses, and at least 34 percent be used for public education.”
Data from the California Department of Education indicates that the total Kindergarten through twelfth-grade payments from the lottery for the 2017-2018 year (the most recent data available) was $1,339,745,693. However, about $7 billion had been spent on tickets. So, less than 20 percent of that went to schools. What happened to that other 14 percent ($980,000,000) or more?
I wonder how much money disappears because of public apathy. In 1984, Proposition 37 passed with 5.4 million votes. However, that year there were 16.6 million registered voters in the state. You don’t have to be a mathematician to figure out that less than one-third of the state’s registered voters approved the proposition. I was one of the 3.9 million people who voted against the proposition. And that means that 7.3 million registered voters did not vote on the proposition at all.
When public decision-making is done by less than one-third of the people who actually make the effort to register to vote, that is, indeed, rule by the minority in a democracy that proclaims, “Majority Rules.” This, in turn, makes it possible for politicians to create loopholes and siphon off money for pet projects, nicer offices, more assistants on the payroll, and so forth.
According to the report by Elaine M. Howle, California State Auditor, “As directed by the Joint Legislative Audit Committee, my office conducted an audit of the California State Lottery. Our assessment focused on whether the Lottery was maximizing its funding for education, and the following report details the audit’s findings and conclusions. In general, we determined that the Lottery has not ensured that it maximizes funding for education and the State Controller’s Office (SCO) is not effectively overseeing the Lottery’s performance.”
Pennies, nickles, and dimes
When we think about the lottery, we don’t just think big, we think ginormic. (I think I made up that word.) As previously mentioned, each year Californians spend about $7 billion on lottery tickets. For people who are not good with big numbers, one billion is one thousand million. So, we spend one thousand million seven times over annually for lottery tickets. If a person wins the Powerball jackpot, his or her take will actually be about $380 million because about $160 million will be taken out for taxes. Those are all very huge numbers, so enormous that most of us can’t truly understand them. We marvel at them and then sort of dismiss them. After all, you can’t spend $380 million in several lifetimes.
And that dismissive attitude filters down to dollars and pocket change. We think of a house that costs $315,000 as a $300,000-dollar house. Retailers price a product at $3.95 so that we don’t think about it costing $4.00. To most people, the difference doesn’t matter. After all, if you’ve got $300,000 for a house, what’s $15,000 more? And, if you can purchase an item for less than four bucks, it’s a steal.
Today, I had to fill the gas tank on my car, a beast that requires the high-octane stuff. It cost $64.32. When asked, “How much is gas selling for today?” I answered, “$4.91.” That was incorrect. It’s actually $4.919. That 9/10 of a cent seems insignificant to us, but try asking the government to cut it.
Ninety years ago, federal excise tax on gasoline was one cent per gallon. Over the years in inched up only fractionally every year. Today, for each gallon of gasoline that we purchase, we pay 18.4 cents to the feds. But, in California, we pay an additional 66.98 cents. And the privilege of living between the mountains and the ocean costs us $1.34 per gallon above the national average.
Of course, none of that matters if we win the lottery.
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Jim Glynn is Professor Emeritus of Sociology. He may be contacted at firstname.lastname@example.org.