What Does the Lottery Do?
In 2015, Americans spent 70.15 billion dollars on lottery tickets. That’s four times as much as what was spent on sports tickets ($17.8B) and over ten times as much as concert tickets ($6.8B). In fact, it's more than what was spent on sporting events, concerts, books, video games, and movies in theater combined. (CNN). So where did that money go? Whereas most of it went towards the lottery jackpot like most people assume, some of it does go towards other places.
25% of this money goes towards big government. That comes out to an impressive $17.5 billion in 2015. This money is then funneled into schools, construction, and so on. Ironically, it even makes its way to gambling anonymous programs as well. In other words, for every $100 spent on lottery tickets, $25 is funneled back into the economy through government.
After the government gets their cut, retailers who sell the tickets get 5-6% of the sales in the form of commision (CNN). This goes towards the profit of the local store, and is funneled back into the economy in the form of income for the retailer’s employers and the retailer’s expenditures. Also, 9-10% of the lottery sales is sent to the lottery company itself to pay its employees and advertising costs.
Finally, the 60% that remains after all of that is used as the big sticker price on the lottery ads, the jackpot. As that 60% becomes larger and larger, more and more people buy lottery tickets, which in turn builds the jackpot spurring more purchases. Then, when someone finally finds that lucky ticket that people would kill for, it’s not all that it seems. Although they are in fact winning the giant jackpot, which is currently $40 million, the government will first take out taxes from your winnings. Your actual win is 38% less than the sticker price, unless you opt to take it in a bunch of tiny payments over decades to avoid taxes (CNBC).
Work Cited
CNN. Cable News Network, n.d. Web. 20 May 2016.
CNBC. CNBC LLC, n.d. Web. 20 May 2016.
This is really interesting to see how exactly the lottery system works. You could have had some more detail about the prices, but in all it was really interesting to read.
ReplyDeleteI feel like it is fair that some of the purchases for the lottery go to other things so then the prize amount is low, if everyone contributed and it went nowhere else the pool would be huge, and it helps out with taxes and such. Sometimes I feel like maybe even more should go to taxes so our federal tax goes down little by little.
ReplyDeleteThis is a very interesting and well thought-out blog post. It truly suprised me that Americans spend more money on lottery tickets than both concert tickets and sports tickets combined. I believe that many people just buy lottery tickets, because they think there is a chance of winning but don't realize the chance is so slim. Although many have been successful with the lottery and the luck of the draw, I would rather save my money and know that it's safe, rather than spending it on something that I have little to no chance to win. Overall, this was a very interesting post and I liked how you made comparisons throughout the whole post.
ReplyDeleteThis was all new to me, I knew that not all of the money was used for the jackpot but it was interesting to see how the money gets split between the government, retailers and consumer. Maybe could've gone a little deeper into the direct impact of the lottery and the impact the winner makes but overall well done.
ReplyDeleteObviously not all of what goes into the lottery comes out, but I found it surprising that the government takes 25% of it. It’s really amazing how much is taken away and how much is still left over. Despite only 60% (or less) of the money paid in makes it out, it’s still a substantial sum. Another shocking statistic was that so little is spent on sporting events and concert tickets compared to the lottery. You would think that people would want to spend their money on something more concrete, something that is guaranteed to be theirs. Instead, more money goes into something that will probably never provide a return. It’s interesting to think about how the simple thrill of having a small chance at winning a large amount of money is enough to sway people into buying lottery tickets.
ReplyDelete- Martin Mueller
What I got from this is the lottery is an example of a money multiplier. That money you put in is used for so much more than just the winnings. It'd be interesting to see some stats on what are the odds you ever win a lottery and if there can be any skill applied to it. Also you could have said what kind of tax lottery tickets are. Overall it was a good and interesting post but there was so much more you could have put into it to beef it up.
ReplyDelete-Carson Cotterell
It is really interesting how much money one can get out of the lottery even if it is 38% less than advertised to people. My question is though, how come the demand for lottery tickets are so high even though the chances of actually winning are like one and a million. Also I wonder if there is a specific way to heighten your chances of winning. A while ago I read that this lady has won the lottery 4 times and she is also a scientist so maybe there is a special equation of some sort. In addition to that, dose the 25% that goes to government just go to the state or the country? Lastly how does the state get this money to use towards the lottery and Shouldn’t we be using that money to pay of debt in our country?
ReplyDeleteThis was really interesting how the lottery works. It does generate a lot of money for the government and the state of the winner. It was disappointing that the past winner wasn't from Wisconsin. It'd be interesting to see some stats on what are the odds you ever win a lottery and if there can be any skill applied to it. Also you could have said what kind of tax lottery tickets are. I thought this was really interesting and informative.
ReplyDeleteThe lottery is just another voluntary tax for people who are willing to play it. The only marginal benefit is that you have a small chance of winning a fortune, but the marginal costs far outweigh the benefits. The money spent on lottery tickets could have been used for purchasing groceries or buying gas, both of which have immediate and consistent benefits.
ReplyDeleteIt's very interesting in how much money one actually receives for winning the lottery. Even though there are all these extra costs, I'd still like to win it! It'd be interesting to see a map or graph on where the lottery winners are most likely to be from.
ReplyDeleteThe lottery is really funny because all this money gets dumped into giving money to the government and eventually one person in the United States. Most of the time people complain about having to pay taxes and giving their money to others, but buying lottery tickets does exactly that. Also, the more people give in to the lottery, the more they help it and the government. Most people probably don't even know where all their money on tickets goes. If it were more widely known that only 3/4ths of money spent on gambling in the lottery actually went more towards the pot, maybe people would be less inclined to buy the tickets in the first place.
ReplyDeleteI think it kind of sucks that 38% of the winnings gets taken out, but it is good that 25% is getting inserted back into the economy. I don’t get why people buy lottery tickets, it's such a low chance of winning, and it’s a waste of money because you are losing 38% of what you win.
ReplyDeleteMost people don't consider where their money goes when they buy a lottery ticket, they figure that it's just a "waste of money" when they buy a lotto ticket and don't win the jackpot, but really their money is going toward helping our economy. So really, if you think about it, purchasing a "losing" lottery ticket is no "waste of money," not at all. The lottery isn't a "game" that you win or lose. The government is smart in that, people's money is going somewhere to assist in stabilizing the economy. Win, Win!
ReplyDeleteEven if you take away the 38%, it comes out to $24,800,000 which is still a good amount of money. Of course it doesn't matter how much money they win if they aren't smart about what they do with it. Using lottery funds to fund the government is actually a good idea I think. Because there are a lot of people who dump their money into it. At least that money is still going into something useful.
ReplyDeleteKelin Olson
I found your article very interesting. I always assumed that when someone won the lottery they got 100% of the money. I never thought about all the money that goes to the government and the lottery company. I liked how you related this to economics when you said that some of the lottery money gets circulated back into the economy. Since people who win the lottery are likely to buy more normal goods, a lot more of this money will go back into the economy and the demand for normal goods will increase. It is interesting that people spend more money on lottery tickets than sports or concert tickets every year. Great article.
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