In Praise Of Lotteries

As surely as Fridays follow Thursdays, large lottery jackpots attract two things in abundant numbers – occasional players persuaded by the eye-popping monetary award to buy a ticket and patronizing warnings from financial writers that lotteries are a sucker's game and only fools play them. Though I'm a pretty hardcore value investor, I'm going to change things up and give some praise to lotteries.

Bad News First
Fairness demands that the negative aspects of lotteries get some air time. For starters, the odds of anyone winning a major American lottery like Powerball or MegaMillions is vanishingly small – one in at least 100 million, typically. As pointed out in some anti-lottery articles recently, your odds are much better of being hit by lighting (1 in 1,000,000), killed by lightning (1 in 2,320,000) or, if you're an American male, being Tom Cruise (1 in 150,000,000).

Playing lotteries also runs the risk of people developing, perpetuating or re-awakening a compulsion to gamble. Many people also willingly convince themselves that their financial condition is hopeless, prudent financial discipline is pointless and the lottery is a valid way of fixing their problems and/or saving for the future.

Last and not least, winning a lottery isn't the golden ticket to a great life that many people expect it will be. While many lottery and sweepstakes winners happily cash their checks, disappear from the public eye, and their lives quite happily, others squander their winnings and end up flat broke.

Good For State Revenue
All of those problems aside, I dare say lotteries are not the horrible things that many financial advisors and writers portray them to be.

For starters, considerable amounts of lottery revenue go back into state budgets. Oregon claims that "97% of every dollar played" goes back to the state and is used to fund projects like job creation, education, and state parks. Likewise, the North Carolina Lottery claims that 58% of lottery revenues go to prizes, 30% goes to an education fund, 7% goes to retailer commissions, and 5% goes to expenses and marketing. Powerball and MegaMillions are a little different insofar as they are operated by multi-state associations, but the same principle basically holds. There are also the much-publicized historical examples of how the Continental Congress used lotteries to fund the Revolutionary War.

Some argue with these numbers and claim that the amount of money that is routed back to the states is inflated. Perhaps that's true, but the reality is that this money was going to be spent by the consumer anyway and the state's take from sales tax, liquor, tobacco, or gasoline taxes is not significantly higher. What's more, those consuming liquor or tobacco are arguably harming themselves and raising state medical expenses.

I would also point out that gambling is all but endemic to human beings. Look around the world and gambling is one of those things you see in practically every culture. So, people can play the lottery, go to casinos, or gamble in other ways. Granted, casino's pay taxes and license fees, but they still get to keep their profits.

Another Form Of Entertainment
Where I really believe lotteries get a bad rap is in how the entertainment aspect is under played. Speaking from personal experience, buying a lottery ticket is in some cases like buying a license to daydream for a few hours or days. It's fun to imagine how that money could change your life, and I know I'm not the only one that has spent an hour or two swapping lottery daydreams over an adult beverage or two.

Buying a Powerball ticket for $2 or a MegaMillions ticket for $1 is "bad," but it's somehow better to shell out $10 or $20 for a movie ticket? The whole point of going to a movie is 90 or so minutes of escapism, distraction, and fantasy; Americans didn't spend $155 million on Hunger Games last weekend because they were interested in the allegorical and symbolic significance. So, how exactly is it that the hours of entertainment provided by a lottery ticket are inferior to those provided by a movie, TV show, sporting event, or book?

Does Any Long-Term Good Come Of It?
Entertainment for its own sake is more than enough justification for me if people want to play the lottery on an occasional, responsible basis. I want to re-emphasize that last part – I am not talking about taking the rent money and using it to buy lottery tickets, nor am I talking about spending money on lottery tickets when bills are going unpaid. But if somebody decides to forego a movie or a Starbucks latte and buys some lottery tickets instead, who does this hurt?

I do wonder if long-term good can come from this as well. I've known people who spoke wistfully of using lottery winnings to get out of debt, buy a home, or start a business. They thought about it so much, in fact, that they started to work out plans for how they could achieve those goals even when their numbers inevitably came up losers. It may seem bizarre, and I scarcely believe this is a common byproduct of playing the lottery, but maybe the lottery-induced daydreaming does lead people to think more seriously about those things they want and need out of their lives and how to bend their financial situations in that direction.

The Bottom Line
Lotteries are not substitutes for financial planning, work, savings, or investments. Lotteries, when viewed and played responsibly, are instead another entertainment option. Just as it would be irresponsible to spend yourself into financial trouble by over-doing it on movies, books, concerts, graphic novels, electronics, or anything else, so too is it with lottery tickets.

Played with a little bit of discipline, though, lotteries are a cheap license to fantasize and daydream about about how your life could be different. Given that that's the same principle that underpins the entire entertainment industry, I think lottery players deserve a little more respect and a little less hectoring about their imprudence.



More From Investopedia

--

Get stories like this on the Yahoo app and discover more every day.
Download it now.
Loading...
  • Oil prices fall on U.S. crude stocks build; fears over China demand
    Oil prices fall on U.S. crude stocks build; fears over China demand Reuters - 6 minutes ago

    Oil prices fell on Wednesday as an unexpected build in U.S. crude inventories weighed on markets, along with concerns that Chinese crude demand could falter as Beijing clamps down on alleged tax evasion in the oil industry. International Brent … More »

  • Turkey launches anti-IS operation in Syria
    Turkey launches anti-IS operation in Syria AFP News - 8 minutes ago

    Turkey's army backed by international coalition air strikes on Wednesday launched an operation involving fighter jets and elite ground troops to drive Islamic State jihadists out of a key Syrian border town. The operation, the most ambitious … More »

  • WPP beats first-half net sales forecasts Reuters - 12 minutes ago

    WPP (WPP.L), the world's largest advertising group, reported a better-than-expected 3.8 percent jump in first-half net sales and nudged its revenue forecast higher on strong demand across the board for its services. The group, run by the … More »

  • PBOC Adds Funds in 14-Day Reverse Repos First Time in Six Months Bloomberg - 26 minutes ago

    The People’s Bank of China auctioned 50 billion yuan ($7.5 billion) of the contracts in open-market operations at 2.4 percent Wednesday, according to a statement on its website. The central bank also offered 90 billion yuan of seven-day reverse … More »

  • Emerging Markets Decline as Investors Await Yellen; Oil Slumps Bloomberg - 34 minutes ago

    Oil slumped after data showed a jump in U.S. stockpiles. A gauge of dollar strength advanced for a fourth day after Fed funds futures ended Tuesday showing a 54 percent chance of a U.S. interest-rate hike by December, up from 51 percent on Monday. … More »

  • Automakers lead Tokyo stocks higher by close AFP - 34 minutes ago

    Tokyo stocks finished higher Wednesday with the market led by strong gains among automakers including Toyota and rival Nissan. The benchmark Nikkei 225 index jumped 0.61 percent, or 99.94 points, to close ... … More »

  • China's COFCO buys rest of Dutch commodity trader
    China's COFCO buys rest of Dutch commodity trader AFP News - 41 minutes ago

    China's state-owned grain giant COFCO will buy out minority shareholders in Netherlands-based commodity trader Nidera and take full ownership of the company, it said, as it seeks to become an agribusiness powerhouse. COFCO's deal to buy out the … More »

  • Lower Rates Affecting Endowment Projected Value
    Lower Rates Affecting Endowment Projected Value feed_manager_auto_publish_494--autopubtest_WPTUMBLR_485 - 1 hour 2 minutes ago

    A few months ago, I received a letter from my insurance company, informing me of a revision in the terminal bonus rate for some participating plans due to the “unfavourable economic and investment climate”. It seems that the recent global economic … More »

  • Ministers Stick to Script as China Spars With Asian Neighbors Bloomberg - 1 hour 3 minutes ago

    Japan’s Fumio Kishida and counterparts Yun Byung Se of South Korea and Wang Yi of China were united in calling on North Korea to stop provocations such as its ballistic missile launch earlier in the day. Kishida said the ministers would strive for … More »

  • North Korea test-fires sub-launched missile close to Japan
    North Korea test-fires sub-launched missile close to Japan AFP News - 1 hour 6 minutes ago

    North Korea on Wednesday test-fired a submarine-launched missile 500 kilometres (around 300 miles) towards Japan, marking what weapons analysts described as a clear step forward for its nuclear strike ambitions. The flight distance, which was … More »

  • KKR Said to Hire Northstar’s Shastry as Southeast Asia Head Bloomberg - 1 hour 8 minutes ago

    Shastry has been Southeast Asia head for Northstar, a firm backed by TPG Capital. New York-based KKR has invested more than $2 billion across Southeast Asia from 2005, including putting more than $350 million into Masan Consumer Corp. in Vietnam’s … More »

  • Asian stocks slip on profit-taking; oil falls
    Asian stocks slip on profit-taking; oil falls Reuters - 1 hour 16 minutes ago

    Asian stocks edged lower on Wednesday as strong U.S housing data overnight increased the chances of an interest rate increase in coming months, prompting some investors to take profits, while oil prices slipped after a surprise jump in U.S. … More »

  • SE Asia Stocks-Tepid as Yellen speech awaited; Philippines falls nearly 1 pct Reuters - 1 hour 18 minutes ago

    By Krishna V Kurup Aug 24 (Reuters) - Philippine stocks fell nearly 1 percent to a 3-week low on Wednesday, led by JG Summit Holdings Inc and Universal Robina Corp, while most other Southeast Asian markets ... … More »

  • China $100 Billion Chip Supremacy Bid Seen Unrealistic (Correct) Bloomberg - 1 hour 20 minutes ago

    China is one of the world’s largest consumers of semiconductor devices thanks to its manufacturing might. It’s also driven consolidation among domestic suppliers to maximise its investments, including the $2.8 billion merger of Tsinghua Unigroup … More »

  • Samsung, Tencent surge in race to become Asia's most valuable firm Reuters - 1 hour 47 minutes ago

    Tencent Holdings Ltd and Samsung Electronics Co Ltd are racing to be crowned Asia's most valuable company as expectations for robust earnings growth push their share prices to record highs. "These companies can grow earnings despite weaker global … More »

  • Oil prices down in Asia, Brent stays below $50 AFP - 1 hour 51 minutes ago

    Oil fell in Asia on Wednesday after industry data showing an increase in US crude stocks added to oversupply worries and traders took advantage of a recent rally to book profits. Prices had closed higher ... … More »

  • Dollar rises as markets await Fed chair speech AFP - 2 hours 2 minutes ago

    The dollar rose Wednesday with the Federal Reserve's policy plans in focus, while the South Korean won fell after the North tested a submarine-launched missile, bringing geopolitical tensions back into ... … More »

  • Era of Raiders Dawns in China Fueled by Money From Shadows (1) Bloomberg - 2 hours 12 minutes ago

    While the battle for China Vanke Co. isn’t exactly the "Barbarians at the Gate" takeover of RJR Nabisco by private equity firm Kohlberg Kravis Roberts & Co. during the leveraged-buyout boom of the 1980s, the scale and significance may turn out to be … More »

  • Online real estate company PropertyGuru appoints Daan Prince as CFO
    Online real estate company PropertyGuru appoints Daan Prince as CFO e27 - 2 hours 13 minutes ago

    Finance leader with 12 years of experience in Asian and European technology markets joins PropertyGuru, completing the executive leadership team Asia’s online real estate major PropertyGuru Group has appointed Daan Prince as Chief Financial Officer, … More »

  • PropertyGuru’s newly appointed CFO Daan Prince will oversee the financial and operational aspects of the group
    PropertyGuru’s newly appointed CFO Daan Prince will oversee the financial and operational aspects of the group e27 - 2 hours 13 minutes ago

    Finance leader with 12 years of experience in Asian and European technology markets joins PropertyGuru, completing the executive leadership team PropertyGuru Group (“PropertyGuru” or the “Group”), Asia’s online property group, has appointed Daan … More »

  • Mind the air-gap: Singapore's web cut-off balances security, inconvenience
    Mind the air-gap: Singapore's web cut-off balances security, inconvenience Reuters - 2 hours 18 minutes ago

    Singapore is working on how to implement a policy to cut off web access for public servants as a defence against potential cyber attack - a move closely watched by critics who say it marks a retreat for a technologically advanced city-state that has … More »

  • Cool on A380, Rejuvenated Qantas Eyes More Boeing Dreamliners Bloomberg - 2 hours 24 minutes ago

    Australia’s largest carrier is due to receive the first of its eight Dreamliners at the end of 2017, and has options and purchase rights to buy another 45 of the long-range, fuel-efficient aircraft. “I’d like to order all of them if I can make a … More »

  • Asian stocks meander, dollar up on North Korea's missile
    Asian stocks meander, dollar up on North Korea's missile Associated Press - 2 hours 25 minutes ago

    Asian stocks meandered Wednesday as investors awaited fresh cues from Federal Reserve on the outlook for interest rates. Markets were steady following the submarine launch of a ballistic missile by North ... … More »

  • Gold steady as investors await U.S. rate hike clues
    Gold steady as investors await U.S. rate hike clues Reuters - 2 hours 43 minutes ago

    Gold was trading in a narrow range on Wednesday as investors waited for clues on whether the U.S. Federal Reserve would hike interest rates this year. At the end of the week, Fed Chair Janet Yellen is scheduled to address a gathering of global … More »

  • Why You Need To Keep Up To Date With Financial Markets DollarsAndSense.sg - 2 hours 51 minutes ago

    The financial markets are not just for business professionals The post Why You Need To Keep Up To Date With Financial Markets appeared first on DollarsAndSense.sg. … More »

 
Recent Quotes
Symbol Price Change % Chg 
Your most recently viewed tickers will automatically show up here if you type a ticker in the "Enter symbol/company" at the bottom of this module.
You need to enable your browser cookies to view your most recent quotes.
 
Sign-in to view quotes in your portfolios.

MARKET MOVERS

  • Most Actives
    Most Actives
    NamePriceChange% Chg
    0.1290.0000.00%
    N21.SI
    0.995-0.015-1.49%
    Y92.SI
    0.157+0.008+5.37%
    AFC.SI
    0.31+0.01+3.33%
    5OT.SI
    0.250.00-1.96%
    5ME.SI
  • % Gainers
    % Gainers
    NamePriceChange% Chg
    0.64+0.07+12.28%
    BMT.SI
    0.159+0.014+9.66%
    QS9.SI
    0.505+0.050+10.99%
    BHU.SI
    1.91+0.16+9.14%
    5ER.SI
    0.315+0.025+8.62%
    M30.SI
  • % Losers
    % Losers
    NamePriceChange% Chg
    0.011-0.115-91.27%
    QF6.SI
    0.23-0.17-42.50%
    AWI.SI
    0.205-0.055-21.15%
    I06.SI
    0.16-0.04-20.00%
    K22.SI
    0.45-0.10-18.18%
    BFK.SI

Market Data

  • Currencies
    Currencies
    NamePriceChange% Chg
    1.3527+0.0014+0.11%
    USDSGD=X
    1.5278+0.0008+0.05%
    EURSGD=X
    1.7813-0.0014-0.08%
    GBPSGD=X
    74.1100+0.0010.00%
    SGDJPY=X
    5.7291-0.0064-0.11%
    SGDHKD=X
    2.9905+0.0147+0.49%
    SGDMYR=X
    9,810.9707-5.7334-0.06%
    SGDIDR=X
    4.9178+0.0044+0.09%
    SGDCNY=X
    1.0276-0.0013-0.13%
    AUDSGD=X
  • Commodities
    Commodities
    NamePriceChange% Chg
    1,340.40-5.70-0.42%
    GCZ16.CMX
    18.85-0.07-0.38%
    SIU16.CMX
    103.89-1.81-1.72%
    ^XAU
    2.110.00-0.17%
    HGU16.CMX
    47.34-0.76-1.58%
    CLV16.NYM
  • Bonds
    Bonds
    TreasuryYield (%)Yield Change
    1.14+0.01
    ^FVX
    1.55+0.01
    ^TNX
    2.240.00
    ^TYX