When I bought three MegaMillions tickets before everyone and his relatives gummed up the machines on Friday, I got more and more aggravated at people - not because of the size of the jackpot, but at the cavalier attitudes of people who had never played the lottery before, thinking they were going to be the ones with the winning ticket.
Outraged Liberal brings up a great question: why are people so willing to avoid taxes, but when a lottery offers a huge jackpot, people have no qualms in paying hundreds of dollars in tickets?
Purely for the entertainment value, lotteries are far easier and far less painless way to pay taxes (which lotteries really and truly are) than writing a check to either the IRS or the Massachusetts Department of Revenue every month - especially those who pay that 5.85% optional tax. Conversely, the lure of winning the jackpot prize is designed by the states to extract as much money from the starry-eyed hopeful as possible, while certain taxes can be avoided by not doing the prescribed activity that activates those taxes.
That's also why some people blindly overpay their taxes intentionally - to get
as big a refund as possible from the government. That parallels when people pay the
lottery so much without paying attention to the odds - to win the biggest jackpot they can. A smarter thing to do is make sure the playing field is equal. When people pay their taxes, the goal should be to have a refund as close to zero as possible, meaning your withholdings to the government is equal to what the government is expecting from you (you've had $2,000, they calculate you owe $2,010, you overpaid by $10). The same thing applies to lotteries: forget the jackpot and try to break even. If you play $10, winning $10 is optimal; anything extra is just gravy.
Showing posts with label The Lottery. Show all posts
Showing posts with label The Lottery. Show all posts
3/15/2011
Watching the Ten Percenters
I'm responding to this excellent Herald article by Hillary Chabot as a long-time lottery player.
I've cashed tickets at the Lottery offices for years. Until 2004, I got the full amount of my winnings, and since then I've paid my 5% cut to the state. (Quit laughing back there if you're thinking I'm financing Deval Patrick's junkets. OK, maybe a nice lunch at a London restaurant.) If you have nothing to hide and you won a substantial amount of money, you would go and cash in the ticket...
...unless you owed child support, back taxes, parking tickets, and the like. Not only do you get the 5% haircut from the state (or, if you're over $5,000, an additional 25% to the IRS), whatever you owe to the Department of Revenue gets taken. For instance, if you owe $100,000 to the state for child support and you win $250,000, all you get left is $87,500, as $75,000 is sent to the DOR and IRS for taxes and the $100,000 is sent to the ex who has been demanding payment. Even if you win as little as $600, whatever you're in arrears gets reduced by your winnings. If you owe $100,000 and you win $600 - sorry, no check for you, but you get your bill reduced to $99,400.
Enter the professional ticket casher, or the "ten percenter." What a ten percenter will do is cash the ticket for you in his own name, take 10% for themselves, and then give the rest to the winner. The result: the tax/child support cheat still owes money, but keeps his winnings out of the radar of the DOR and the IRS
If you're not in trouble and you still want to remain anonymous (or have relatives or collectors dial you night and day because they discovered your suddenly fattened bank account) a blind trust established by a lawyer would be better than giving it to a ten percenter. That way, the lawyer can come forward and claim the prize in the interest of the trust; the members of that trust remain anonymous (well, except for those under 18).
So what to do about this loophole that's costing the DOR millions in back taxes and child support?
Appeal to the ten percenters to turn against the ninety percenters. A back stabbing move? Sure, but if the ten percenter knows that the cheat won't give them their 10%, nothing lubricates the skids more than a ten percenter entrapping his boss.
Here's how it would go: a tax cheat owes $50,000 in child support and $25,000 in back taxes. The tax cheat wins $100,000 in Mass Cash. His $70,000 net will be seized if he turns in the ticket, so he gives it to the ten percenter with a promise of giving him $10,000. The ten percenter knows the tax cheat has screwed him in the past, so he works with the DOR and cashes in the ticket for the cheat.
The catch: the $70,000 check the ten percenter receives gets deposited into a traceable DOR account, who is also monitoring the amount of money given to the tax cheat. When the tax cheat discovers DOR and IRS agents at his door and arrests him for child support and tax evasion, he also will find out all of his assets are seized too, thanks to the help of the ten percenter. The $60,000 that the tax cheat tried to evade gets applied to his outstanding liens, and the ten percenter still gets his 10% of the original winnings - plus 10% interest on what the cheat originally owed, which is $7,500. A fairly nice bonus.
The program, which I would call "Operation Dime Time," would help the DOR get lost cash from their evaders through the work of the ten percenters, who would also get rewarded for their assistance. The ten percenters themselves would shed their image as mules for tax and child support cheats. Even better - children who have been suffering due to the selfishness of their parents would get the money they deserve.
I've cashed tickets at the Lottery offices for years. Until 2004, I got the full amount of my winnings, and since then I've paid my 5% cut to the state. (Quit laughing back there if you're thinking I'm financing Deval Patrick's junkets. OK, maybe a nice lunch at a London restaurant.) If you have nothing to hide and you won a substantial amount of money, you would go and cash in the ticket...
...unless you owed child support, back taxes, parking tickets, and the like. Not only do you get the 5% haircut from the state (or, if you're over $5,000, an additional 25% to the IRS), whatever you owe to the Department of Revenue gets taken. For instance, if you owe $100,000 to the state for child support and you win $250,000, all you get left is $87,500, as $75,000 is sent to the DOR and IRS for taxes and the $100,000 is sent to the ex who has been demanding payment. Even if you win as little as $600, whatever you're in arrears gets reduced by your winnings. If you owe $100,000 and you win $600 - sorry, no check for you, but you get your bill reduced to $99,400.
Enter the professional ticket casher, or the "ten percenter." What a ten percenter will do is cash the ticket for you in his own name, take 10% for themselves, and then give the rest to the winner. The result: the tax/child support cheat still owes money, but keeps his winnings out of the radar of the DOR and the IRS
If you're not in trouble and you still want to remain anonymous (or have relatives or collectors dial you night and day because they discovered your suddenly fattened bank account) a blind trust established by a lawyer would be better than giving it to a ten percenter. That way, the lawyer can come forward and claim the prize in the interest of the trust; the members of that trust remain anonymous (well, except for those under 18).
So what to do about this loophole that's costing the DOR millions in back taxes and child support?
Appeal to the ten percenters to turn against the ninety percenters. A back stabbing move? Sure, but if the ten percenter knows that the cheat won't give them their 10%, nothing lubricates the skids more than a ten percenter entrapping his boss.
Here's how it would go: a tax cheat owes $50,000 in child support and $25,000 in back taxes. The tax cheat wins $100,000 in Mass Cash. His $70,000 net will be seized if he turns in the ticket, so he gives it to the ten percenter with a promise of giving him $10,000. The ten percenter knows the tax cheat has screwed him in the past, so he works with the DOR and cashes in the ticket for the cheat.
The catch: the $70,000 check the ten percenter receives gets deposited into a traceable DOR account, who is also monitoring the amount of money given to the tax cheat. When the tax cheat discovers DOR and IRS agents at his door and arrests him for child support and tax evasion, he also will find out all of his assets are seized too, thanks to the help of the ten percenter. The $60,000 that the tax cheat tried to evade gets applied to his outstanding liens, and the ten percenter still gets his 10% of the original winnings - plus 10% interest on what the cheat originally owed, which is $7,500. A fairly nice bonus.
The program, which I would call "Operation Dime Time," would help the DOR get lost cash from their evaders through the work of the ten percenters, who would also get rewarded for their assistance. The ten percenters themselves would shed their image as mules for tax and child support cheats. Even better - children who have been suffering due to the selfishness of their parents would get the money they deserve.
11/06/2009
The lump sum option in the Lottery's instant tickets...not a great idea
The Lottery, beginning with this summer's games, are now offering the choice between taking your winnings in installments or being paid out in a lump sum.
For example, if you win $1 million, you can take either 20 payments per year of $50,000 each, or one payment of $650,000.
First, the installments:
Now, with the lump-sum:
The higher the prize, the more you stand to lose. If you won $10 million, the amounts I mentioned above go up by a factor of 10 - meaning you lose $3.5 million if you take the lump sum and receiving a check for $4,550,000. On the other hand, taking the 20 checks at $350,000 each means you get $7,000,000.
So your best bet? Having a steady, albeit, lower winnings check for 20 years is much better than instant gratification and losing a lot more money.
It's partially correct that the Lottery is a math tax on the stupid - because it takes a stupid person to utter that phrase.
For example, if you win $1 million, you can take either 20 payments per year of $50,000 each, or one payment of $650,000.
First, the installments:
- With taxes, at 25% federal and 5% state, you will receive a check for $35,000 per year.
- Over 20 years, you will receive a total of $700,000.
- Depending on your tax bracket, you will likely stay within or go up perhaps one or two tax brackets. For instance, if you're in the 15% tax bracket, you will stay there or increase to either the 25% or 28% tax bracket.
Now, with the lump-sum:
- With taxes, at 25% federal and 5% state, you will receive a one-time check for $455,000.
- The $650,000 represents 13 annuity checks at $50,000 apiece, meaning you will lose 7 annuity checks at $350,000 for this convenience.
- Compared with the annuity of 20 checks, the loss will be $245,000 over the period of 20 years ($700,000 - $455,000), or about $12,250 a year.
- Accepting the $650,000 will also put you into the 35% tax bracket for that year, meaning you will likely pay much more in taxes. For instance, if you're in the 15% tax bracket, you will be in the 35% tax bracket that year - and all taxes are progressive.
The higher the prize, the more you stand to lose. If you won $10 million, the amounts I mentioned above go up by a factor of 10 - meaning you lose $3.5 million if you take the lump sum and receiving a check for $4,550,000. On the other hand, taking the 20 checks at $350,000 each means you get $7,000,000.
So your best bet? Having a steady, albeit, lower winnings check for 20 years is much better than instant gratification and losing a lot more money.
It's partially correct that the Lottery is a math tax on the stupid - because it takes a stupid person to utter that phrase.
10/30/2009
When that 1% lottery commission isn't enough
WBZ-TV did an excellent investigation on Lottery agents who tried to claim huge winnings for themselves.
What was the best scene? Watching the Lottery investigators swoop right in like a drug raid and take out the lottery machine and the lottery tickets. I can imagine the conversation going something like this:
"We had a sting operation not long ago. The undercover agent discovered you had illegally tried to dupe a customer out of their winnings. Effective immediately, we are removing your machine and taking back all of your scratch tickets and electronic forms. Step aside, sir. CAN I HAVE YOUR ATTENTION, PLEASE? IF YOU HAVE ANY TICKETS IN YOUR HANDS, WE'D APPRECIATE YOU GIVING THEM TO THESE OFFICERS. THEY ARE NOT VALID."
The 1% commission in the title refers to the amount a lottery agent receives when they cash a ticket. If, in a book of instant tickets, a lottery agent pays out $726, they get a commission of $7.26. If you win $2.50 on a Keno ticket, the agent gets $0.025. If you win $250,000 on a winning MegaMillions ticket, the agent gets $2,500. Definitely not small change.
When an agent discovers they're not selling enough to get a decent commission, that's when they start to get shady and pull scams. The ones who do quite well with their commissions never try to pull such stunts as
giving you $100 for a $500 ticket
telling you a ticket is a losing ticket when it's actually worth a lot more
and
claiming the illicit winnings and then fleeing the country.
Meanwhile, how can you defend yourself in the first place? (OK, I might as well throw a bone to the finger-waggers who tell us the lottery is evil and preys on the poor. I guess these finger-waggers have no problem having the poor pay 60% taxes on cigarettes and being followed around at Whole Foods for potential shoplifting, right?)
1. If you should hit the Big One, SIGN THE BACK OF THE TICKET IMMEDIATELY. This means the ticket is yours and yours alone - the "bearer instrument." If the corrupt agent tries to pass off the ticket and the signatures don't match, the Lottery will put up an immediate red flag. They also require positive ID - so if you're Ralph Malph and the ticket is signed Potsie Webber, not only will they not pay you, you have the additional chance of being arrested for forgery and uttering a false document.
2. MAKE A PHOTOCOPY OF THE WINNING TICKET. This means both sides of the ticket (including your signature) should be copied for your records. This will also protect you should the corrupt agent attempt to call you a liar and try to weasel you out of your winnings by stating your ticket "won nothing." Better yet: any ticket over $100 should be photocopied, but claimed at the local Lottery offices.
3. If you've won over $600, YOU MUST CLAIM YOUR WINNINGS AT THE LOTTERY OFFICES. NEVER have the agent scan the ticket at the store - they know exactly what "FILE CLAIM" on a lottery machine means. This is why on scratch tickets, there are random "losing" codes on tickets over $600. (With the two new tickets they've put out, they've doubled the losing codes from 12 to 24, and the new codes thwart players who look for just the codes by putting in really good imposters for the ones between $20 and $500.) Details from the Lottery website here.
4. If you happen to be the unlucky soul who gets $5 when they should have gotten $500, DON'T HESITATE TO CONTACT THE LOTTERY. If you're ever in doubt, DON'T CASH IN THE TICKET. Don't hand it to the agent, don't let the agent intimidate or sweet-talk you into handing it over. This is a sign to leave the store and contact the Lottery - the best is to contact Lottery Headquarters here (scroll down to Lottery - the phone number to report agents or for general information is below) or, if you prefer email, contact the lottery at webmaster_at_masslottery_dot_com. Judging by the speed and ferocity of this state agency, Lottery investigators don't take kindly to being cheated.
Many of the lottery agents I've dealt with are fantastic and they are honest. Just remember to be alert, and you should do just fine.
What was the best scene? Watching the Lottery investigators swoop right in like a drug raid and take out the lottery machine and the lottery tickets. I can imagine the conversation going something like this:
"We had a sting operation not long ago. The undercover agent discovered you had illegally tried to dupe a customer out of their winnings. Effective immediately, we are removing your machine and taking back all of your scratch tickets and electronic forms. Step aside, sir. CAN I HAVE YOUR ATTENTION, PLEASE? IF YOU HAVE ANY TICKETS IN YOUR HANDS, WE'D APPRECIATE YOU GIVING THEM TO THESE OFFICERS. THEY ARE NOT VALID."
The 1% commission in the title refers to the amount a lottery agent receives when they cash a ticket. If, in a book of instant tickets, a lottery agent pays out $726, they get a commission of $7.26. If you win $2.50 on a Keno ticket, the agent gets $0.025. If you win $250,000 on a winning MegaMillions ticket, the agent gets $2,500. Definitely not small change.
When an agent discovers they're not selling enough to get a decent commission, that's when they start to get shady and pull scams. The ones who do quite well with their commissions never try to pull such stunts as
and
Meanwhile, how can you defend yourself in the first place? (OK, I might as well throw a bone to the finger-waggers who tell us the lottery is evil and preys on the poor. I guess these finger-waggers have no problem having the poor pay 60% taxes on cigarettes and being followed around at Whole Foods for potential shoplifting, right?)
1. If you should hit the Big One, SIGN THE BACK OF THE TICKET IMMEDIATELY. This means the ticket is yours and yours alone - the "bearer instrument." If the corrupt agent tries to pass off the ticket and the signatures don't match, the Lottery will put up an immediate red flag. They also require positive ID - so if you're Ralph Malph and the ticket is signed Potsie Webber, not only will they not pay you, you have the additional chance of being arrested for forgery and uttering a false document.
2. MAKE A PHOTOCOPY OF THE WINNING TICKET. This means both sides of the ticket (including your signature) should be copied for your records. This will also protect you should the corrupt agent attempt to call you a liar and try to weasel you out of your winnings by stating your ticket "won nothing." Better yet: any ticket over $100 should be photocopied, but claimed at the local Lottery offices.
3. If you've won over $600, YOU MUST CLAIM YOUR WINNINGS AT THE LOTTERY OFFICES. NEVER have the agent scan the ticket at the store - they know exactly what "FILE CLAIM" on a lottery machine means. This is why on scratch tickets, there are random "losing" codes on tickets over $600. (With the two new tickets they've put out, they've doubled the losing codes from 12 to 24, and the new codes thwart players who look for just the codes by putting in really good imposters for the ones between $20 and $500.) Details from the Lottery website here.
4. If you happen to be the unlucky soul who gets $5 when they should have gotten $500, DON'T HESITATE TO CONTACT THE LOTTERY. If you're ever in doubt, DON'T CASH IN THE TICKET. Don't hand it to the agent, don't let the agent intimidate or sweet-talk you into handing it over. This is a sign to leave the store and contact the Lottery - the best is to contact Lottery Headquarters here (scroll down to Lottery - the phone number to report agents or for general information is below) or, if you prefer email, contact the lottery at webmaster_at_masslottery_dot_com. Judging by the speed and ferocity of this state agency, Lottery investigators don't take kindly to being cheated.
Many of the lottery agents I've dealt with are fantastic and they are honest. Just remember to be alert, and you should do just fine.
12/01/2008
Want more money to go to the state? Decrease the winning odds
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.
- 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.
11/28/2007
Publicity the Lottery doesn't need, especially in its time of low sales
You have to play...unless you're a criminal.
Then, even if you've been a model citizen in prison and got out with good behavior, spent a little time at the local funny farm to straighten out the demons, and have the fortune to win $1 million, previous records don't lie - we have to declare your win null and void.
MSL's new slogan: You Have To Play - Clean Criminal Records Only!
Then, even if you've been a model citizen in prison and got out with good behavior, spent a little time at the local funny farm to straighten out the demons, and have the fortune to win $1 million, previous records don't lie - we have to declare your win null and void.
MSL's new slogan: You Have To Play - Clean Criminal Records Only!
4/25/2007
What's the validation code for "Absolute Sucker?"
The MSL is coming up with a brand new game to lighten the wallets of many a player...
The You've Got to Be Insane To Spend $20 on a Lottery Ticket Star Spangled Cash
is the name of this new game, and there will only be 4 million of these tickets sold, and may sell out quicker... because the grand prize is $20 million to be paid all at once; there are also 10 $1 million prizes and 40 $250,000 prizes. The lottery will get $80 million and pay out $40 million...making a neat profit of 50%. The only good thing about this is that the prizes will be paid out all at once, rather than the usual 20 year annuity.
However, you won't like the odds one bit.
Here's our suggestion...if you're going to sell $20 tickets, make every ticket a winner (i.e. odds of 1 in 1) - and all the prizes need not be cash, trips, cars, or "fantasy" stuff like Yankees/Sox games for a decade, with the ability to have the Jumbotron spell out your name. Gift cards, full four year scholarships to colleges of your choice, your mortgage or rent paid for life...or even a brand new home, everything paid (including property taxes)?
$20 million is nice, but not at $20 per ticket.
is the name of this new game, and there will only be 4 million of these tickets sold, and may sell out quicker... because the grand prize is $20 million to be paid all at once; there are also 10 $1 million prizes and 40 $250,000 prizes. The lottery will get $80 million and pay out $40 million...making a neat profit of 50%. The only good thing about this is that the prizes will be paid out all at once, rather than the usual 20 year annuity.
However, you won't like the odds one bit.
The odds of winning $20 million are 1:4,000,000; the odds of winning $1 million are 1:400,000; the odds of winning $250,000 are 1:100,000 and the overall odds of winning a prize in the “Star Spangled Sweepstakes” are 1:78,431.37.Excuse the heck out of us, but what would possess someone to pursue a game with odds of almost 1 in 79,000? Ah, yes, the lottery's PR tells the tale...
The odds of winning cash prizes of this magnitude are the best the Massachusetts Lottery has ever offered.Oh, really? We guess those $5 million prizes on those $10 instant tix mean little, huh? And for one freakin' drawing on July 4th!?
Here's our suggestion...if you're going to sell $20 tickets, make every ticket a winner (i.e. odds of 1 in 1) - and all the prizes need not be cash, trips, cars, or "fantasy" stuff like Yankees/Sox games for a decade, with the ability to have the Jumbotron spell out your name. Gift cards, full four year scholarships to colleges of your choice, your mortgage or rent paid for life...or even a brand new home, everything paid (including property taxes)?
$20 million is nice, but not at $20 per ticket.
4/22/2007
MSL's Instant Replay: did greed kill a good idea?
At the rate of 25 losing instant tickets to 1 fresh $1 ticket, the idea of helping the environment while giving you the chance to win money is a genius, thought the Massachusetts State Lottery. The amount of dead ticket trash recycled, plus the ability for ticket scavengers to win at least something for their rooting the barrels at convenience stores, benefitted everyone.
Unfortunately, when people began to bring in wheelbarrows and cases of losing tickets, the novelty wore off. One book of 300 fresh $1 tickets required 7500 losing tickets, and some people walked away with several books, only to regenerate new losing ticket trash and recycle those tickets for more new $1 tickets...so the MSL cut the vicious cycle of greed and said, "sorry, no Instant Replay for 2007, because it costs us too much to maintain the program."
Instead of giving away $1 instant tickets, they could have given away Lottery novelties and gift cards, and other more useful things, but it looks like greed on the part of players trumped the nice idea of recycling trash.
Unfortunately, when people began to bring in wheelbarrows and cases of losing tickets, the novelty wore off. One book of 300 fresh $1 tickets required 7500 losing tickets, and some people walked away with several books, only to regenerate new losing ticket trash and recycle those tickets for more new $1 tickets...so the MSL cut the vicious cycle of greed and said, "sorry, no Instant Replay for 2007, because it costs us too much to maintain the program."
Instead of giving away $1 instant tickets, they could have given away Lottery novelties and gift cards, and other more useful things, but it looks like greed on the part of players trumped the nice idea of recycling trash.
3/31/2007
Make Income Redistribution History, Backwards Sherwood Forest edition
Boston Magazine's John Wolfson does an excellent piece on how the Massachusetts State Lottery is the ultimate redistribution scheme: it takes money from the poor - earned or paid by the government - and gives it to the government, who then distributes it to all 351 cities and towns in the form of lottery aid.
The shiny new fire engine in Weston? Thank the people in West Roxbury who shelled out $300 on a book of scratch tickets and ended up winning a mere $75-80. Newburyport gets to avoid a property tax override because the residents of Lawrence were able to spend 2/3 of their paycheck on Keno. And the city of Lynn probably financed new teachers, firemen, policemen, and other public works for Swampscott, Marblehead, and very small Western New England towns that have all but one Lottery agent, if any.
And, of course, the other people who depend on the poor's paychecks - the ones that have low if not nil Massachusetts state income taxes - is the Legislature, who will happily recoup the monies given in Medicaid, WIC payments, and other government payments in the form of Lottery revenues; if you can entice a poor person to whom you're shelling out benefits to try to become rich and get rid of welfare/debt through the path of least resistance, rather than hard work and education, chances are they'll take the bait...and continue being poor, if not penniless.
The right way to show the poor that the lottery is not the best investment scheme is to show them the real odds of some of these games, not the odds the Lottery promotes*. Treat the Lottery like the do cigarettes, drugs and alcohol - it's a vice, a stupid tax, it's legalized robbery - and make it unattractive and nasty. Reducing the prize payouts from a liberal 71% to a more realistic 52-55%, posting the real odds on the backs of tickets, and showing exactly what taxes will be taken out and how much the prizes are really worth will make the poor think twice on buying a strip of tickets, eliminating or hiding the verification codes on scratch tickets, introducing harder, more complex scratch games (Bingo is a good start), and reducing promotion and public relations may diminish that bromide "You Have to Play" to "Do You Really Want to Waste Your Money On This Scheme?"
So robbing Peter to pay Paul, and then having Paul give back all of his money and arrive in Peter's lap is an "opiate of the masses" that benefits only two people - the wealthy and the government.
*For instant tickets, the odds are calculated by taking the number of tickets and dividing them by the total number of tickets available for that game. For example, the new Red Sox $10 ticket is listed by the MSL as having odds of 1 in 3.55. This is actually correct - if you consider how the prize is paid out (e.g. for $20, you get get $20, two $10's, $10 plus two $5's, etc. and each prize has different odds; the odds of getting $20 as a single value is tougher than getting 4 $5's.) We took their odds and ran it through an Excel spreadsheet, and it indeed came out to 1 in 3.55.
Then we asked ourselves what the odds were on getting a certain prize without regards to how the prize is paid (e.g. a $50 prize, no matter how it came out). We noticed that the total odds for a certain prizes actually went down - but the total odds went up! To get any prize on this new ticket, the real odds are 1 in 74.56 - roughly 21 times more than the Lottery advertises! The Lottery also states "you have the best chance to win $100!" Not quite...the odds of winning $100 on that ticket are actually 1 in 54.84. In a book of 100 tickets, this comes out to a ticket, maybe two, giving you that magic $100.
And for the people who think they'll get that $1 million on that scratch ticket they bought all at once, tax-free, think again: 30% in taxes are taken out automatically for all winnings over $5,000, and anything over $600 - $4,999 gets 5% taken by the Commonwealth (since 2004; before then, anything under $5,000 merely had to be reported to the IRS and no mass taxes were taken out).
The shiny new fire engine in Weston? Thank the people in West Roxbury who shelled out $300 on a book of scratch tickets and ended up winning a mere $75-80. Newburyport gets to avoid a property tax override because the residents of Lawrence were able to spend 2/3 of their paycheck on Keno. And the city of Lynn probably financed new teachers, firemen, policemen, and other public works for Swampscott, Marblehead, and very small Western New England towns that have all but one Lottery agent, if any.
And, of course, the other people who depend on the poor's paychecks - the ones that have low if not nil Massachusetts state income taxes - is the Legislature, who will happily recoup the monies given in Medicaid, WIC payments, and other government payments in the form of Lottery revenues; if you can entice a poor person to whom you're shelling out benefits to try to become rich and get rid of welfare/debt through the path of least resistance, rather than hard work and education, chances are they'll take the bait...and continue being poor, if not penniless.
The right way to show the poor that the lottery is not the best investment scheme is to show them the real odds of some of these games, not the odds the Lottery promotes*. Treat the Lottery like the do cigarettes, drugs and alcohol - it's a vice, a stupid tax, it's legalized robbery - and make it unattractive and nasty. Reducing the prize payouts from a liberal 71% to a more realistic 52-55%, posting the real odds on the backs of tickets, and showing exactly what taxes will be taken out and how much the prizes are really worth will make the poor think twice on buying a strip of tickets, eliminating or hiding the verification codes on scratch tickets, introducing harder, more complex scratch games (Bingo is a good start), and reducing promotion and public relations may diminish that bromide "You Have to Play" to "Do You Really Want to Waste Your Money On This Scheme?"
So robbing Peter to pay Paul, and then having Paul give back all of his money and arrive in Peter's lap is an "opiate of the masses" that benefits only two people - the wealthy and the government.
*For instant tickets, the odds are calculated by taking the number of tickets and dividing them by the total number of tickets available for that game. For example, the new Red Sox $10 ticket is listed by the MSL as having odds of 1 in 3.55. This is actually correct - if you consider how the prize is paid out (e.g. for $20, you get get $20, two $10's, $10 plus two $5's, etc. and each prize has different odds; the odds of getting $20 as a single value is tougher than getting 4 $5's.) We took their odds and ran it through an Excel spreadsheet, and it indeed came out to 1 in 3.55.
Then we asked ourselves what the odds were on getting a certain prize without regards to how the prize is paid (e.g. a $50 prize, no matter how it came out). We noticed that the total odds for a certain prizes actually went down - but the total odds went up! To get any prize on this new ticket, the real odds are 1 in 74.56 - roughly 21 times more than the Lottery advertises! The Lottery also states "you have the best chance to win $100!" Not quite...the odds of winning $100 on that ticket are actually 1 in 54.84. In a book of 100 tickets, this comes out to a ticket, maybe two, giving you that magic $100.
And for the people who think they'll get that $1 million on that scratch ticket they bought all at once, tax-free, think again: 30% in taxes are taken out automatically for all winnings over $5,000, and anything over $600 - $4,999 gets 5% taken by the Commonwealth (since 2004; before then, anything under $5,000 merely had to be reported to the IRS and no mass taxes were taken out).
Subscribe to:
Posts (Atom)