Who Are the Nation's Biggest Suckers? Lottery Players
"Winning the lottery represents the most practical way [for me] to accumulate several hundred thousand dollars."
Seriously? The "most practical"? Crazy as that may sound, a few years back, the Consumer Federation of America and the Financial Planning Association published a joint survey revealing that yes, indeed, 21% of American adults agreed with the statement.
Admittedly, in a nation plagued by high and rising public debt, 8% unemployment, and inflation hitting food costs and gas prices, it's understandable that people might believe winning the lottery was their only chance at an "out."
It's understandable ... but wrong. The truth is that getting rich from winning the lottery isn't just unlikely. It's (statistically) impossible.
Billion-Dollar Losing Bets
A recent report out of Bloombergdeclares citizens of the state of Georgia some of "the biggest suckers" in America.
Collectively, Peach State inhabitants spent $3.4 billion on lottery tickets over the past year -- an average of $470.73 per adult. That amounted to a full 1% of their annual income, ensuring the state a high ranking on Bloomberg's "sucker index." But it was its low rate of winning lottery payouts (62.9%) that really pushed Georgia over the top and won it the biggest-sucker prize.
Stop chortling, Yankees. With 1.3% of personal income going to its state lottery, Massachusetts is No. 1; New York is No. 3 for lottery-ticket buying. California and Delaware rank among the least generous states for payouts.
Pathetic "Winning" Payouts
According to the U.S. Bureau of Economic Analysis, seven U.S. states don't run lotteries at all: Alabama, Alaska, Hawaii, Mississippi, Utah, Wyoming, and (shocker!) Nevada. Of the 43 states that do run lotteries, the average payout is just under 60% of the revenue dollars collected.
That's an important number. You see, rankings aside, whenever you're talking lotteries, true "winners" are few and far between.
According to Bloomberg's study, state-run lotteries "have the worst odds of any form of legal gambling" in America. They're so bad that when you play the lottery in Louisiana, over time you're going to average $0.51 in "winnings" for every dollar you pay to play. The best odds in the nation can be found in Massachusetts, but even up there you're looking at a $0.72 payback on each $1 lottery ticket. And the average payout is just $0.60.
Now, let's compare the odds of taking home one of those big jackpots to the odds of some other activities:
- Getting pregnant from a one-night stand: 1 in 20
- Getting struck by lightning: 1 in 10,000
- Dying in an airplane crash: 1 in 355,318
- Being dealt a royal flush in a given hand of poker: 1 in 655,750
- Dying from a flesh-eating bacteria: 1 in 1 million.
- Winning the California Super Lotto Jackpot: 1 in 18 million.
14 Days to Broke
What does all this mean to you? Well, say you're a happy-go-lucky guy with $1,000 burning a hole in your pocket. You decide to "invest" this money in lottery tickets, and keep on reinvesting the proceeds of your bets to buy even more lottery tickets.
How long do you think you could keep this game rolling? Let's play:
If you buy $1,000 worth of $1 lottery tickets on Day 1, then statistically speaking, the average lottery payout of 60% means you'll have $600 left to spend on Day 2.
Spend that $600 on Day 2, and by Day 3, you're down to $360.
Keep going, and by Day 14, you will have (on average) just $0.78 left jingling in your pocket.
In other words, two weeks of playing the lottery has left you too broke to afford a single lottery ticket. You've gambled away nearly every cent you started with.
It's no wonder Bloomberg calls it the "Sucker Index."