Lottery

In past issues The News has examined the friendly games of chance — craps, for example. But for every person who plays craps hundreds buy lottery tickets. The lottery — the greatest public theft since withholding — is the government’s version of cigarettes: a useless, harmful vice, cheap enough to entice kids, and designed to addict. It takes the guts of a politician to attack tobacco while making money from the likes of “Jingle Bucks” and “Lucky Bug.” That members of The 100 play the lottery saddens, but then again you weren’t picked for your brains. And so, as a service to the members, this Guide.

Our subject is the traditional game (“The Pick”), not the “scratchers.” For anyone who buys “scratchers” we recommend isolation and de-programming. (But your mother’s cousin once won $10,000 with a “scratcher?” Your mother’s other cousin got cancer of the spleen; did you quit your practice and wait to die? The world is big; everything imaginable will happen to Somebody. What matters are the odds that it will happen to you.)

The first thing to keep in mind about the lottery is that it is something -- like all other things Very Bad or Very Lucrative — that only the government is allowed. The second thing is that there is another financial device only government is allowed: taxes. The third thing is that the first two things are the same thing. Government takes money with taxes and spends it in ways calculated to keep the votes coming in. Government takes money with the lottery and spends it in ways calculated to keep the votes coming in, including kicking a little back at random to ticket buyers. The lottery is a tax on greed. It is not a “game.”

There is one difference between the lottery and other taxes: the lottery is voluntary. That’s why government spends millions to convince you to buy tickets. It wants buying tickets to be “voluntary” just like Hollywood wants buying tickets to this week’s fabulous new movie to be “voluntary”: they can’t make you do it but you’re a lame loser if you don’t and you’ll be sad and everybody else will be happy and People Who Matter will ostracize you.

This produces another thing only government is allowed: deceptive advertising. Ever notice how the lottery ads clearly point out how low your chances of winning are? And caution you not to spend the money unless you can afford to lose it? And warn that gambling can be addictive? No, you haven’t, though government requires similar warnings for everything from cars to Cracker Jacks. (Most people, you say, know these things anyway? Most people knew about cigarettes, too. Government warnings exist to protect the stupid, not those who know. Its like those letters announcing that “you may already have won” an enormous prize: everybody gets them, only the ignorant and gullible believe them; but when some senile codgers in Iowa did believe, Congress held hearings to express calculated outrage.)

However, people who buy will buy, and badly need instruction. Four basic questions confront lottery-tax payers: how many tickets to buy, how to pick the numbers, Powerball or state, and lump-sum or annuity. Here are the answers:

How many tickets should you buy? The lottery ads tell you one true thing: you can’t win if you don’t play. The odds of winning by not buying a ticket are zero. The odds of winning by buying a ticket are one in 4.5 million (Powerball: 80 million). But the difference between a one-in-4.5-million chance and a zero chance is enormous. One dollar buys that difference. One ticket buys the hopes, the dreams, the fantasies of a life of luxurious indolence. But how much does each additional dollar buy? Another enormous difference? No, just a one-in-4.5-million difference. The value of the second ticket is infinitesimal compared to the first. So how can you justify paying the same price for it? That’s like buying a box of Kleenex for $3.50 and a second box for $3,500,000. At those prices even you would have sense enough to buy one at a time. Buying one lottery ticket may be debatable; buying two is insane.

How should you pick your numbers? At random. There is no way to predict what numbers will come up and anyone who tries to sell you a system for improving your odds is (a) a fraud and (b) better than you are at devising schemes to make money. Some systems avoid, others favor, numbers that have come up recently; the lottery office abets these frauds (something you or I would go to jail for) by giving out lists of the most- and least-drawn numbers. Both the con artists and the State depend upon your forgetting grade-school statistics: the chance that a number will come up this time is the same as it was last time, whether the number has come up fifty times in a row or never at all.

Remember also not to play the same set of numbers every time. This is the Road to Addiction since it means you must play every game forever. If you were to skip one game and your numbers came up, either you would kill yourself or your family would take care of that for you.

Should you play Powerball or the state lottery? The chances of being struck by lightning are better than of winning the state lottery. The chances of being struck by lightning twice are better than of winning the Powerball. Some people do get struck twice -- but how much would you take out of your pocket or purse right now to wager that you will be? That’s how much you should spend on Powerball. (Powerball entices by having a number of smaller prizes; but did you know that the odds of winning $100 with even a scratcher are 2-3 times better than in Powerball?) If you live in constant fear of being killed by a rogue meteor falling from space then you can no doubt rationalize buying a Powerball ticket. And if you win, you can afford a real helmet to replace the aluminum foil you wear to block out the Voices.

Lump sum or annuity? An annuity can sound tempting: guaranteed annual income for life that you needn't work for or pay taxes on. But it is, as the orators say, a snare and a delusion. Take the lump sum.

One reason is inflation. Your ability, or anyone else’s, to predict what inflation will do is as good as your ability to predict lottery numbers. But there will be inflation; all that will change is how much. You can try to keep up with it by investing your capital at good rates of return and re-investing much of that return. But you can’t do that with an annuity because you never have the capital to begin with.

Some else does, which is the other reason to take the lump sum. An annuity is a product sold for profit by an insurance company. The company bets that it can make more money investing the principal than the annuity contract requires it to pay you. It can’t be wrong since it rigs the odds, i.e., prices the annuity itself; it is guaranteed truckloads of money unless Life As We Know It comes to an abrupt halt. You should make that money instead.

The only reason not to take the lump sum -- which does apply to some in this group -- is if you can’t be trusted not to blow it all instantly. A better idea, though, is to set up a trust for the lump sum and let a friend or a professional handle your money.

The truly definitive instruction for the lottery, though, is: Don’t Do It. The temptation can be enormous, and the State’s ads do everything they can to play upon greed and envy: Somebody will win the prize, why not you? Life’s lesson, however, is stern but simple: Somebody will win a fortune, Somebody will become famous, Somebody will marry the prom queen and live happily ever after -- but Somebody will always be a guy you’ve never met.