I’ve dabbled in the lottery a lot more than I’d like to admit over the years. On roadtrips I can’t help but buy a few scratchers to pass the time while we stop at gas stations. I must be one of the luckiest men in the world because amazingly I haven’t won once.
Given the posted odds of the scratchers it’s statistically impossible that I keep losing, yet I still do. My friends who join me in buying scratchers, however, win at an impressive rate. I’ve made peace with the fact that I’ll live my days out as nothing more than a good luck charm.
Nevertheless every time the lottery reaches an astronomical amount I dabble. Last November, a few friends and I took the leap and bought tickets to the Powerball when it passed a two billion dollar prize mark. We all rationalized it because each ticket was technically “expected value” positive. In other words, the prize money multiplied by the odds of winning was greater than the value of the ticket itself. It was a foolproof plan.
As evidenced by me still writing this blog, none of us ended up winning. I wasn’t even a good luck charm anymore, just a stats major who didn’t understand how stats actually worked.
The roots of the California Lottery can be traced back to 1984, when voters approved Proposition 37. This initiative amended the California Constitution and authorized the establishment of a state-run lottery. The decision came at a time when the state was grappling with budgetary constraints and the lottery was seen as a solution to bolster public funding for education without raising taxes.
A mandated minimum of 84% of all funds that must be given back to the public in the form of either prizes or funds for public education. The remainder, a maximum of 16%, was to be spent on administration, such as salaries, advertisements and lottery execution.
According to the California Lottery Organization, 95% of the money collected goes back into the community. A significant portion of the lottery's revenue, often around 30% to 35%, is dedicated to funding various educational programs in the state.
According to KTLA, about 80% of the Lottery’s contributions goes towards K-12 schools and about 14% goes to community colleges. Those percentages are set by the California Controller’s Office.
There is a heavy downside to having such a large lottery system in the state. Although the California Lottery has stressed the importance of responsible play by actively promoting messages of moderation, this system can act as a gateway into the world of gambling.
Lotteries have been accused of exploiting vulnerable individuals, such as problem gamblers and those with gambling addictions. The lure of the big jackpot can lead to excessive gambling behavior, leading to financial ruin and personal hardships for individuals and their families.
As reported by NPR, in a nationwide investigation of state lotteries by the Howard Center for Investigative Journalism at the University of Maryland, researchers found that state lottery retailers are disproportionately grouped in lower-income communities. The lottery essentially ends up being a regressive tax which extracts more from certain communities than it gives.
An occasional license to dream of a fantastical future acts as a well needed escape for many people. However, the large levels of marketing promoting gambling has overall net negative effects. Due to its large levels of addiction it would be akin to the state directly running and promoting bars or recreational drug dispensaries.
Ideally the state will temper their dependence on the lottery as a revenue stream and look to more standard, progressive forms of taxation to provide the much needed funding our schools need.