A few weeks ago, I put out a call on Twitter and on Facebook for detailed posts that people would like to see. I got enough great responses that I’m going to fill the entire month of July – one post per day – addressing these ideas.
On Facebook, Jeffrey requested that I discuss “why ‘winning the lottery’ isn’t the answer.”
In my eyes, the lottery (as it exists today) is a no-win proposition. Almost all of the time, you lose. On the rare occasions when your numbers do come up, you still lose.
If You Don’t Win: The Losing Proposition of Buying a Ticket
First of all, let’s look at the slim chance of winning. Since there are lots of lottery variations out there, let’s say that we’re looking at a PowerBall-esque lottery where you have to draw 5 white numbers and one red number to win. There are 49 white numbers and 42 red numbers.
Winning the grand prize – matching all the numbers – is a 1 in 80,089,128 chance, or roughly 1 in 80 million.
Winning common secondary prizes is also a long shot. Matching four of five normal numbers plus the “power ball” is a 1 in 1,668,523 chance. Matching all five white numbers is a 1 in 1,906,884 chance. Other small prizes are offered with better odds, but many of these amount to little more than a money refund.
The odds of being struck by lightning in a given year are 1 in 1,000,000. You have a better chance of being struck by lightning than you do of winning either the grand prize or a top secondary prize in a Powerball drawing.
In other words, the odds of you actually winning a significant amount from a single lottery ticket – or even a pile of them – is insignificantly small.
Even if the odds were perfect and you could guarantee yourself a prize by buying that many tickets, the prizes don’t match up to the ticket buying. For instance, if buying 1,906,884 tickets could guarantee you that you would win $200,000, which is the prize (in Florida, at least) for matching all five white numbers, you’d still be spending $1,906,884 to win $200,000 – a roughly 90% loss on your investment. If you were to play the “PowerPlay” version, you’d spend $3.8 million to win $1 million – a roughly 72% loss on your investment.
Every dollar spent on the lottery is far better off spent on the stock market – or even in buying gold. Yes, as much as I am against buying precious metals as your primary investment, it’s a vast improvement over buying lottery tickets. If you have $1,500 in cash, buy an ounce of gold instead of buying $10 in lottery tickets every week for the next three years. If you buy the gold, in three years you’ll have an ounce of gold. If you buy the tickets, in three years (unless you are extremely lucky) you’re going to have nothing.
What about the “distraction” and “escape” that the lottery provides? If you feel that you need “distraction” and “escape” from your life, the best way to start making that change is to invest that money. Instead of spending $5 on lottery tickets, put $5 in your savings account. Do that twice a week – as often as you would buy lottery tickets. In three years when you need to replace your car, you’ll have $1,600 for a down payment in place of a trade-in. This will make your car loan bills smaller – or possibly completely eliminate them. That kind of thing changes your life. It takes you from living paycheck-to-paycheck to a point where you can easily start socking away some money for the future.
If you still want a bubble of feeling good, go get some exercise in the fresh air. Take a long walk in the park. Start having a series of dinner exchanges with your friends for social benefit, where you all go to one person’s house once a week for a meal on a rotating basis. Join a community group. Do some volunteer work. Those will all give you a sense of feeling good while that $5 you were spending on lottery tickets goes elsewhere, creating the foundation for a truly better life for yourself.
If You Do Win: The Painful Proposition of Sudden, Unearned Wealth
The argument that people always use when talking about lottery tickets is “What if I win?” Well, what if you do win?
Cailie Rogers won $3 million in a lottery. Six years later, she’s a single mother of two working as a maid to make ends meet.
Ken Proxmire won a million dollars. Several years later, his wife left him and he filed for bankruptcy.
William Post won $16.2 million in a lottery. Within a decade, he declared bankruptcy, his brother ordered a contract killing on his life, his girlfriend dumped him and sued him, and he lives on Social Security.
Jack Whitaker won $315 million in the lottery. Within a decade, his wife divorced him, his daughter and granddaughter both died of consumption-related issues, his property was broken into repeatedly, and he wound up bouncing checks in casinos because he no longer had the cash to cover them.
I could go on listing these stories all day. There are a lot of them. Why? Money changes everything.
People you’ve known all your life suddenly start viewing you as their meal ticket. They ask for money and you either have to say no to them or start forking over cash to everyone you know. Say no to some and yes to others and you’re going to create tons of hard feelings. Criminals will target you because you’re suddenly rich without any experience in handling it.
In short, winning the lottery often means losing many of the relationships you care the most about, losing the safety of your home, and also losing the safety of your former relative anonymity. You’re now a target to criminals, a meal ticket and/or a lender to the people who used to form your close inner circle, and the source of angst not only in virtually every relationship you have with others, but often in the relationship between people you care about.
But hey, you’ve got money, right?
If someone handed me a winning lottery ticket, I would not cash it. It brings too much heartache. I would quietly (and preferably anonymously) slip that ticket into the hands of a charity that I care about and walk away from it.
Suddenly having tons of money changes everything – and rarely for the better.