Simply put: Playing the lottery is generally one of the worst bets around.
I once had a colleague who would refer to the lottery as a ``tax on stupidity''.
Why is this so?
Depending on the state(s) involved, lotteries usually return between 40 and 60 percent of the funds taken in to the ticket holders. Often, about half of the funds go directly to the state(s) running the lottery, while about 5-10% goes to the ticket vendor.
This means that for each dollar you spend on the lottery, you can expect to get (in the long run) about 40 to 60 cents back.
But it is even worse than this, since if you win a big prize you must pay taxes on it.
If you win the jackpot, you'll be paying about 40% of your winnings to Uncle Sam, so your return for your dollar investment is reduced to 25-35 cents (60 percent remains of 40-60 cents).
It may be even worse if you take the 20 year payout for your jackpot, since inflation will probably eat away at the value of the winnings and you could probably do better investing the lump sum on your own over the long term.
It has always intrigued me that one of the ways that a number of states were able to justify starting their own lotteries and obtain approval from legislators and voters was that the money raised from the lottery would fund education.
Do you really think that if less money was raised from these lotteries, all of a sudden state spending on education would be reduced by the same amount?
I don't think so.
The lottery just gives the legislators more money to spend on whatever they want. If funds raised by lotteries really went toward education, the states would be educating the public about how bad a deal it is to play the lottery.
At egrandslam.com, we feel that if you must play the lottery, you should look at your lottery dollar as an entertainment expense. Do you get the same enjoyment from playing the game and for as long a time (per dollar) as other forms of entertainment, such as going to movies, renting videos, going bowling, etc.? If not, you are better off spending your hard-earned money on these other forms of entertainment.