Lottery Madness

The Washington Post, Tuesday, July 28, 1998; Page A15

NEW PRESTON, Conn.-They're going nuts up here over the Powerball lottery. Connecticut is one of 20 states, plus the District of Columbia, selling tickets for tomorrow night's drawing for a grand prize estimated at an all-time record $250 million.

Since such populous adjacent states as New York, New Jersey and Massachusetts don't have Powerball, streams of cars are crossing Connecticut's borders with salivating buyers. There are traffic jams on I-95 and the Merritt Parkway, and folks were waiting in line up to eight hours at the Greenwich Cigar Store. The lottery was the talk of Dean's Deli on Route 202 here in New Preston, a tiny town in the bucolic northwest corner of the state. I even bought a $1 ticket yesterday.

Most of the time, lotteries are a scam. Only about half the receipts for a typical game go back to the players as winnings; the rest go to possibly worthy government projects and expensive marketing. But with huge Powerball carry-over jackpots, the odds shift, and bettors actually have an edge.

In Powerball, you pick five separate numbers from 1 to 49, then a sixth from 1 to 42. The odds of a single ticket winning the big pot are remote: one in 80,089,128. The payoff tomorrow, however, will be about $250 million (depending on how many tickets are sold) over 20 years. Or you can take a lump sum of about $150 million, which will be my personal preference when I get the chance.

So the winner Wednesday, if there is one, will be paid as though the odds were 1 in 150 million. Even after taxes (depending on the state where you live), you could end up with as much as $90 million in a lump sum—which, mathematically at least, makes high-jackpot Powerball the best gambling game in America.

This is not to say that I advise playing. You are far more likely to be killed by lightning than to hit the winning number with a $1 ticket. It's pathetic and enraging to hear stories of people going into their savings, or even taking out loans, to play Powerball. In an unfortunately typical story, a waiter from the Bronx bought 3,000 tickets with money he had been saving for tuition to study aircraft design at a trade school. "If I win," he said, "I won't have to go to school. Heck, I can buy my own aircraft."

I have no moral objection to lotteries, or to any form of gambling. If people find it stimulating to risk their cash on Pick Four or Powerball or blackjack or football pools, that's their business.

But the state itself should not run gambling games any more than it should run liquor store or cigarette vending machines. First, there are very few businesses that are appropriate for governments, period—missile defense, yes; railroads, no. Gambling should not be on the list.

Second, it is especially pernicious for states to be involved in lotteries with the clear knowledge that they are enticing thousands of their citizens to blow money they can't afford to lose.

Third, when governments have a big stake in an activity that can harm people, they are apt to use their considerable power to encourage it. That's the risk in the proposal for high cigarette taxes—that states will get hooked on the revenue (as they have with lottery money) and end up promoting smoking.

And Americans are hooked on lotteries. In 1996 they spent $34.2 billion on lottery tickets of all sorts, according to La Fleur's Lottery World, an industry publication. That's more than $300 per family. For its size, Washington, D.C., is the lottery capital of the nation, with spending of about $1,000 per household.

While critics of the stock market like to compare it to a lottery or a casino, it is the opposite. If you play the market long enough, you'll earn an average of 11 percent on your money. But lotteries—like casinos—are set up for the state, or the house, to win. If you play the lottery long enough, you will lose about half what you put up.

If Jay Patel, who bought $3,000 worth of Powerball tickets in Greenwich on Sunday, were to put the same amount into the stock market, then, if history holds, he would have about $24,000 in 20 years. But if he hits Powerball, he will have $250 million. In the end, that's the attraction—and it's not insignificant. With Powerball, you have an actual chance of winning a quarter-billion by putting up just one dollar.

Chasing such a prize might even be seen as noble or quixotic. I personally think it's stupid, but, then again, I did buy a ticket yesterday morning at Dean's Deli. So here's hoping.