Lotteries and prize draws are big businesses throughout the world, and entice significant annual investments from individuals who dream of scooping a huge and potentially life-changing cash prize. In the United States, the Mega Millions and Powerball lotteries have become a key feature of monthly consumer expenditures. According to the North American Association of State and Provincial Lotteries, Americans spent a total of $50.4 billion on lottery tickets and video lottery terminals during 2009 alone.
SEE: Is The Lottery Every Worth Your Money?
The profits generated by national lotteries are therefore understandably huge, with a total of $17.6 billion recorded across all participating U.S. states in 2009. This rose even further to $17.9 billion in the financial year of 2010, as Americans invested their hard-earned wages in pursuit of the ultimate cash reward. With the stakes so high and the chances of winning so minimal, however, is participating in the lottery a waste of cash or simply a high-risk investment opportunity that is worth a weekly gamble?
Lotteries in the U.S.
In actual fact, while your chances of winning the lottery anywhere are decidedly slim, the sheer size of the U.S. population and popularity of the game means that American participants must climb an even steeper mountain towards any potential windfall. This was evident for all to see in the formative part of this year, as the nation's Mega Millions jackpot soared to an unprecedented $656 million after being unclaimed for several weeks. When the first winner was announced at the end of March, an estimated 1.5 billion tickets had been sold nationwide.
Now even though this equated to several tickets being purchased per U.S. resident, the odds of each participant winning stood at approximately 1 in 176,000,000. This means that that statistically there was a greater likelihood of being struck by lightning or becoming a billionaire than there was of claiming the Mega Millions jackpot. Americans still invested more than $1 billion into chasing their fanciful dreams of wealth and fortune. This is reflective of a growing trend, where lottery sales continue to soar despite the uncertain economic climate.
SEE: Going All In: Comparing Investing And Gambling
The Argument Against National Lotteries
An interesting consequence of the $656 million Mega Millions jackpot win is that there has been a significant rise in the number of syndicates that are purchasing tickets. This proves that rather than being discouraged by the seeming insurmountable odds of victory, Americans are instead looking for innovative ways to improve their chances and actively investing more into buying tickets. Now, while an estimated one in three global lotteries are won by syndicates, the likelihood of winning remains remote in the extreme, which raises questions about participants and whether they could put their money to better use.
Even for those who win the lottery, their financial future or long-term happiness is not necessarily secured. Acquiring huge sums of money can inspire any number of extreme emotive reactions, and there have been several instances where winning the lottery has triggered a serious decline in lives of individuals and families.
The Benefits of National Lotteries
There are individual state statistics which suggest that the majority of people only purchase lottery tickets when the jackpot has been steadily building over a period of weeks, with just nine to 12% of Illinois residents playing regularly. This would suggest that rather than being symbolic of a growing gambling culture in the U.S., national lotteries are in fact played responsibly and only sporadically by most participants.
Another factor in favor of lotteries is the money that they generate for state funded projects, with public education bodies in particular benefiting from the investment made by participants. With this in mind, people who play the lottery responsibly are contributing towards local community development, which actually means that their small weekly investment at least creates some form of social change. In terms of monetary value, 34 cents out of every $1 spent on lottery tickets is invested into education, with 58 cents being awarded to winners in the form of prizes and 6 cents paid to participating retailers for sales commissions.
The Bottom Line
National lotteries across the globe are always likely to be the subject of extreme opinion and controversy, and not least because players in the U.S. and Europe are looking to invest more during periods of sustained austerity. The fact remains, however, that participants have an individual responsibility to play the game responsibly, and spend within their means while pursuing the dream of huge cash prizes. As long as they do so, then there is no reason why they cannot enjoy the lottery while also contributing to state funded educational projects.