The Ugly Underbelly of the Lottery
If you’ve ever played a lottery, you know that your chances of winning are pretty slim. Yet, you still play for that little sliver of hope that somehow you’re going to be the exception that proves the rule. And that’s where the ugly underbelly of the lottery comes in. It’s a form of psychological addiction that makes people feel like they deserve to win, even if the odds are long against them.
A few centuries ago, Lottery was common in Europe, with the proceeds used to build town fortifications and provide charity for the poor. It spread to America by way of England, where it was embraced by Protestant colonists despite strict proscriptions against gambling. And, in the early years of our country, it was a critical source of revenue for public works and even universities, despite a Protestant aversion to taxes.
But the lottery’s popularity has ebbed as our economy has grown and state budgets have been squeezed. It became difficult for governments to maintain their generous social safety nets without raising taxes or cutting services, both of which were unpopular with voters.
The modern lottery tries to counter that unpopularity with two messages. First, it suggests that playing the lottery is fun and that you might even win a prize that will transform your life. This message has been largely successful, and it is the one that lottery commissions promote today. The second message is that you can play the lottery and feel good about yourself, because it’s a socially responsible activity. This is a less effective message, because it obscures the fact that most people who play the lottery are deeply committed gamblers and spend a significant portion of their incomes on it.
While it’s impossible to know how many of the numbers will be drawn in a given drawing, there are ways to improve your odds. For example, choose a group of numbers that are more likely to be drawn together and avoid numbers that end with the same digit. That’s the trick that Richard Lustig, a former professional gambler who won the Powerball seven times in two years, used to win.
Another way to increase your chances of winning is to buy an annuity. This will allow you to receive your jackpot in annuity payments that begin when you win and continue for 29 years. Taking this option can prevent you from blowing through your entire winnings in a single burst, which is known as the “lottery curse.”
In addition to increasing your odds of winning, buying an annuity can also help you reduce your tax burden. Unlike a lump sum, annuity payments are taxed at different rates. This can make a difference when you’re trying to minimize your federal and state tax liability. However, this is a decision that should be made carefully with the help of an accountant or financial adviser. You should also consider the implications for your retirement savings plan.