Lottery Tickets Aren’t The Best Christmas Present

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When it comes to Christmas presents, it’s possible that the Massachusetts State Lottery makes them — but that doesn’t make giving the Lottery’s product to friends and family is a good idea.

During the 2019 fiscal year, Bay Staters spent more than $5.5 billion on the lottery. Research from Investopedia found that residents of Massachusetts spend more per person ($860.70) on the lottery than any other state.

While the state paid out $3.91 billion of that in prizes (72.4 percent), more than $1.1 billion (20 percent) of it went to the state’s 351 towns and cities as unrestricted local aid. According to the Lottery’s web site, these funds are put towards road improvements, education, parks and recreation, snow removal, and senior citizen programs. The rest went towards administrative and compensating stores that sell lottery tickets.

Although the lottery generates a significant amount of revenue for the state government — with the average Bay Stater losing $241 annually based on its payout rate — it preys on the poor and is a cleverly disguised voluntary tax.

While many people enjoy playing the lottery because they think it is fun, it serves one purpose:  to generate revenue for the government. Sure, there are high payouts. There are $10 million top prizes on a scratch ticket with five million to one odds and Lucky For Life tickets where one in 30 million tickets give someone $7,000 a week for life, among others. However, those are just the incentives to get people to pay into the system. The Lottery sells people the dream of being a millionaire in exchange for contributing to the government’s coffers.

So who exactly is most intrigued by the idea of becoming a millionaire? Those who don’t have much money.

Lower income Americans spend a disproportionate amount of their earnings on lottery tickets. A September 2018 Bankrate study found that 28 percent of Americans who earn less than $30,000 per year play the lottery at least once per week compared to 19 percent of those who earn more than $80,000.

In December 2019, Bankrate reported that those low-income Americans who play the lottery spend 13 percent of their annual income on lottery tickets compared to the 1 percent spent by those who earn more than $80,000. By that logic, a regular lottery player earning $25,000 a year in Massachusetts would lose about $900. That’s not good.

Other studies have similar findings. 

A 2012 study conducted by the South Carolina State House found that despite being 28 percent of the state’s population, households earning less than $40,000 annually comprised 54 percent of the state’s frequent lottery players. Plus, research from The Atlantic in 2012 found that those who earned less than $13,000 annually spent, on average, 9 percent of their earnings on lottery tickets.

Typically, it is difficult to get people to pay voluntary taxes, Massachusetts has a voluntary 5.85 percent state income tax rate; few opt to pay it. That even includes the state’s most progressive politicians like U.S. Senator Elizabeth Warren, U.S. Senator Ed Markey, U.S. Representative Joseph P. Kennedy III and others.

And other than the lottery basically being a tax, there is another problem: gambling addiction.

A 2017 UMass study found that while just 2 percent of the population has a gambling problem, that number is 3.3 percent for Powerball players, 4.4 percent for scratch ticket players, and 7.6 percent among those who play Keno.

Surely, nearly everyone who gives lottery tickets as a gift is doing it as an act of kindness.

But is it?

There are certainly downsides — especially when giving to minors. As The Florida Council on Compulsive Gambling points out, minors who gamble are at a greater risk of developing a gambling addiction later in life. Plus, they are more likely to engage in other risky behaviors like smoking, drinking, and using drugs.

A gift card for a modest amount to a store or restaurant or online seller won’t make anyone a millionaire. But it might be a better option than a lottery ticket.