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The Lottery: Is It Worth Playing?

Posted: Monday, Feb 10,2020 | Time: 07:26 am | Edited by: The Lottery Lab Staff

The lottery-is-it-worth-playing

“You can’t win if you don’t play” - The Rule Of Any GAME

The question is: “What’s the best way to play?”. Lotteries are like most games of chance.  They are designed with two important mathematical properties.  First, the odds of winning are the same for each repetition of the game regardless of the number of times you have played before.  The second property of any game of chance is that the amount a player stands to lose in a single repetition of the game feels insignificant.  

Of course, a lottery offers one exciting feature that other games of chance don’t: it is possible to strike it rich in a single repetition of the game. For some, they buy one ticket and win millions.  But for others, playing the lottery can be an endless series of losses. This is particularly problematic for people with little money to spare.  According to recent studies, a large number of lottery players come from the lower economic classes. Researchers estimate that in some jurisdictions 40% of lottery players are unemployed. In Maryland, 60% of all lottery tickets are bought by the poorest one-third of the population. Similarly, people in Michigan without a high school diploma spend five times more on the lottery than those with a college education. Let’s have a look at how a lottery seams its framework.

Probability

In a lottery, someone is eventually going to win the jackpot. And in order to win, you need to be “in the game”.

The rules of probability dominate lotteries. These rules dictate that you do not increase your odds of winning the lottery simply by playing more frequently. Every time you buy a lottery ticket, there is an independent probability that the ticket will be a winner.  

This probability behaves much like the toss of a coin toss. Every time a coin is tossed the probability of it coming up heads is the same (50%)  regardless of how many times it has been tossed before. This same property applies to the lottery because the odds stay the same, regardless of the number of tickets you have purchased in the past or the results of past drawings.

It is true that you can increase your odds of hitting the jackpot by purchasing more lottery tickets for the same lottery drawing. But buying more tickets doesn’t change the odds that apply to each single ticket.  Instead, your odds get multiplied by the number of tickets that you purchase (assuming each ticket has a unique set of numbers). This might sound like it can give you a big advantage, but consider this:  The odds of winning the Powerball jackpot on any given drawing is about 1 in 292 million.  If you purchase 10 tickets, you improve your odds to 1 in 29.2 million.  Want to buy 100 tickets?  The odds of a jackpot ticket are at best 1 in 2.9 million.  It is true that your odds are “better”, but your odds are still not “good”.

Lottery Players

Despite knowing the odds of winning the lottery, people continue to play. Approximately 57% of American adults collectively spend around $80 billion per year in the hope of striking it rich. For many of us, the lottery serves as a source of fun and, if we win, satisfaction. However, there are some folks who don’t have the money to spare. Repeatedly chasing jackpots can be a drain on their income.  According to numerous studies, a significant number of lottery participants reside in the lower economic classes. The tantalizing thought of winning big lures them with the fantasy of finding that winning lottery ticket. A recent study found that in California, 40% of those who played the lottery were unemployed.

Investment vs. Gambling

In March 2011,  Mega Millions posted a curious headline on its homepage - “Save For Retirement”. This day coincided with the high odds of winning the jackpot, i.e. 1 in 175 million. This was a campaign run by the lottery officials to encourage people to dream about how they could use their winnings and save their future. However, this message triggered a huge revolt from anti-gambling groups because playing a lottery is not a financial strategy.

There is a big difference between using your income to play the lottery vs. invest in stocks and bonds for good returns. Even if you aren’t thinking about winning on Wall Street, it is important to make wise choices when making your daily purchases.  Thoughtlessly spending can put your future at risk regardless of what you are buying. Therefore, it is important to have a responsible strategy for investing your money, regardless of whether you purchase stocks or buy lottery tickets. Secure your future and that of your loved ones’  by making limited purchases rather than spending your money lavishly.

Game-Finale!

When you win the lottery, you will have to work with your financial advisor, tax attorney, and CPA to determine which options are best for you - the annuity or the lump-sum payout. The majority of people see the purchasing of lottery tickets as a low-risk investment. It is like investing $2 or $3 for an opportunity to win hundreds of millions of dollars. Where else can you get this kind of deal? It is an appealing risk-to-reward ratio, even if the odds of winning are small. It’s quite evident whether you play the lottery or not. The decision of whether to play is a subjective one. You can access websites that assist you with the past lottery data, complete analysis of the winning numbers, tools that help you determine the winning numbers and whatnot to help you in winning!

Bonus read - https://www.thelotterylab.com/blog-detail/17-fascinating-worldwide-lottery-facts-figures/

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