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).