I've been doing research on this for the past couple of years, and I've noticed that the lottery's payout on instant games is no less than 67%, after administration and overhead. To wit...
- A $1 ticket has an average payout of 68-70%.
- A $2 ticket has an average payout of 69-73%.
- A $5 ticket has an average payout of 75-78%.
- A $10 ticket has an average payout of 80-83%.
- A $20 ticket has an average payout of 82-85%.
Other lotteries are far less generous with their prizes, around 60% maximum, but with an average of around 55% or so. What would happen if Massachusetts, in light of its fiscal crisis, decided to cut its
prize payout structure?
The way you can do that is to keep the current amount of low-tier prizes ($10 or less) as is, but make the higher tier prizes ($20 or more) harder to get. To do so, you cut the amount of higher tickets.
For example, the Holiday Bucks payout of 71.82%, which is the total amount paid out in prizes ($10,859,400) divided by the total number of tickets (15,120,000) sold at $1 apiece, depends on the following prize structure for prizes $20 and over...
$5,000 prize x 60 tickets = $300,000 in the $5,000 "pool"
$100 prize x 13650 tickets = $1,365,000 in the $100 "pool"
$40 prize x 18900 tickets = $756,000 in the $40 "pool"
$20 prize x 54000 tickets = $1,080,000 in the $20 "pool"
Say the lottery changes the prize pools to this...
$5,000 x 30 prizes = $150,000
$100 x 1512 = $151,200
$40 x 3024 = $120,960
$20 x 30240 = $604,800
We've saved $150,000 in the $5,000 pool, $1,213,800 in the $100 pool, $635,040 in the $40 pool, and $475,000 in the $20 pool, for a total savings of $2,473,840, making the effective payout $7,881,360, or 52.13%.
This nearly $2.5 million is quite a neat bundle of savings, and this is just for the $1 tickets! If the lottery cut its payouts to 55% across all tickets, it would bring in a lot of revenue for the state, and it would certainly avoid toll hikes, gas tax hikes, and property tax hikes - and maybe leave a little to bring down the income tax to 5%.
On the other hand, critics will give the guilt-wracked spiel about the "those who can least afford it" filling in the budget gap, saying so super-expensive condos, while cooking super-exclusive food, and entertaining their super-shallow friends. Maybe they should downsize to the levels of "the people who can least afford it" and see how it feels for once - starting with their charmed luxury lifestyles. While they're at it, they can dig deeper than their conceit and contempt for those who don't have six figure salaries and a trophy spouse.