In a calendar year, Americans spend more money – to the tune of $70 billion dollars – on lottery tickets than music, movies, books, video games and sports teams combined. It’s common knowledge that the lottery preys primarily on everyday people – normally residing in marginalized communities: racial minorities, low wage earners, those living in poverty, and those grappling with addiction. Across the nation, people earning less than $10,000 a year spend, on average, 6% of their income on lottery tickets. Since poor areas produce the most winners, they’re also purchasing the most tickets.
The dream of instantly trading poverty for yacht life
America loves rags to riches stories. We can’t help ourselves, it’s in our DNA. Culturally we’ve been seduced by fantasies of grandeur which are supported by the American Dream – ‘it could be me next!’ Committed players are unaware that winners of more than $600 are subject to 45% taxes on their windfall. The lottery system is not designed to let anyone but the house win.
Games with long odds act as a gateway drug that sucks people in with the chance to win an outrageous sum of money. People quickly crave more wins so they begin playing smaller games – ‘the more you play, the more you win’ is an irresistible siren song. In fact, state lotteries’ business models are structured to receive 70-80% of their revenue from 10% of lotto players. If that wasn’t terrifying enough, during the 2008 recession, more than half the states in America saw an increase in lottery sales.
Take back control
The government relies on lotteries to fund basic social programs so there’s a strong incentive not to change the current gaming model. It’s up to individual people to take a hard look at their returns, do the wins make it worthwhile to spend all that money? For most lottery players, a wiser more stable long term investment, that can also be taught to the younger generation as a path to sustainable socio-economic change, is equity crowdfunding. For as little as $10, anyone can own equity in high growth startups. Imagine the person who earns $10,000 per year allocating their 6% lotto spend to equity crowdfunding. The year over year investment can build valuable equity and cash flow that’s more powerful than sporadic small lottery wins.