Gambling, Lottery and the Idiot’s Odds

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  1. Show Notes

Ever heard the lottery referred to as “the fool’s tax?”  Learn why the lottery is for idiots and why the odds are always in the house’s favor in a casino.

The odds of winning the Powerball lottery are more than one in one hundred and seventy five million.  That’s a lot of zeros.  If lightening struck (you actually have much better odds of this happening, one in 700,000) and you did win, one in three lotto winners are in serious financial trouble or bankrupt within five years.  In fact, the odds of you being struck by lightening FIVE THOUSAND TIMES is higher than the odds of you winning the lottery once.

One of the most annoying things about working in an office is being pressured to join the lottery pool.  That and to sponsor “charity walks.”  The argument that if you buy more tickets, as you would in a pool, you’re much more likely to win is crap too.  Your odds don’t go up much until you start buying thousands of tickets.  Then your co-workers tell you it’s just good fun and you’re missing out.  Take Matt’s advice and offer them the same five dollars to do a little dance for you.  That sounds more fun than getting nothing back for the lottery five bucks.

Playing the lottery is for stupid heads.

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If you spend twenty dollars a month on lotto from the ages of 25-65, you’ll likely earn nothing.  If you put the same amount into a mutual fund, you’ll earn $93,000 after taxes.  Want to waste your money and get nominated for a Darwin Award?  Go play with fireworks.  You’re 146 times more likely to die in a fireworks related accident than win the lottery.  No one ever said, “Here, hold my beer,” before buying a lottery ticket.

The next time your redneck cousin is bitching about having to pay taxes while holding up the line at the gas station while he scratches off lottery tickets, remind him of this.  A very small portion of collected revenue is actually used for payouts.  Most of it goes back to the government.  Hence the term, “idiot’s tax.”

Gambling doesn’t get a pass either.  If you spend $100 an hour playing roulette, you lose on average, $5.26 per hour.  Gambling brings in more revenue than movies, sporting events, theme parks, cruises, and recorded music combined.  The house always wins.  If you’re a really good black jack player, the house still has odds of .5% on you.  Like the slots?  The house does too.  They have the edge on you there to the tune of 35%.

There are plenty of ways to grow your money but playing the lottery and hitting the casino are not among them. Going to Vegas or Atlantic City can be fun.  Gambling can be fun too but don’t go in expecting to walk away with some winnings.  If you have a handle on your finances, take a set amount of money and have a blast gambling that.  But you don’t want to be the sad case pawning your grandmother’s wedding ring in a last ditch effort to win back what you couldn’t afford it lose.  As for lotto pressuring co-workers, tell them to stay the hell away from you unless they have Girl Scout cookies.

Show Notes

Boulevard The Sixth Glass:  A dark Belgian ale.

Business Insider:  Some stats about winning the lottery.

Kiplingers:  Five better investments than the lottery.

Betterment:  Take what you would have spent on lottery this week and open your Betterment account instead.

Candice Elliott - Senior Editor
Candice Elliott is a substantial contributor to Listen Money Matters. She has been a personal finance writer since 2013 and has written extensively on student loan debt, investing, and credit. She has successfully navigated these areas in her own life and knows how to help others do the same. Candice has answered thousands of questions from the LMM community and spent countless hours doing research for hundreds of personal finance articles. She happily calls New Orleans, Louisiana home-the most fun city in the world.

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