Let's be honest, we could all benefit from a couple million in the bank, especially right now after a year of economic and financial uncertainty. However, is entering the lottery worth it? The odds of winning the jackpot prize in any lottery game are very small. Take the Powerball, for example. The odds of winning any prize with the Powerball are one in 24.9, but your chances of winning the jackpot are a mere one in 292.2 million.1 To put it in perspective, you are actually more likely to be killed by lightning than you are to win the lottery. Although the odds are slim, millions of Americans still gamble their hard earned money as many purchasing lottery tickets every week while some purchase them every day.
Continue reading below as we investigate who gambles, and why the appeal is so great even though the odds are so small.
Who Plays The Lottery?
Even with a small chance of winning, nearly half of all U.S. adults have played the state lottery.2
According to a recent study however, most of lottery ticket purchasers tend to have a low socioeconomic status.
According to a recent survey, the bottom three groups on the socioeconomic scale spent the most money on lottery tickets, while the highest socioeconomic group spent the least amount. Furthermore, the study found that Black survey participants spent significantly more on the lottery than any other racial or ethnic group surveyed.3
Another study found that 40 percent of lower-income Americans have reported buying a lottery ticket in the past year, and 11 percent of them admit that they sometimes gamble more than they should.2
The Chances of Winning Are Slim
Like mentioned above, the odds of winning the lottery jackpot are very slim. Many think that by playing in multiple lottery games, you’re increasing your chances of taking home the prize. However, that's not how gambling works.
The only way to increase your odds of winning is by purchasing multiple lottery tickets for the same lottery game. However, since so many people play the lottery, your odds don't increase significantly if you were to by two or three tickets. For example, if your odds of winning are one in a million, two in a million is not much of an increase. To significantly increase your chances of winning the lottery, you would need to purchase a significant number of tickets - which, of course, can get expensive. Also, it is important to note that as more and more people buy into a lottery game, the chances of winning decrease for everyone.
At that point, it is up to you to decide if it is really worth it?
If the people who have the least disposable income statistically spend the most on lottery tickets - why? Although they know their odds of winning the lottery are slim to none, there are three main reasons why many people continue to play the lottery and continue to spend their hard-earned money on lottery tickets. Below we discuss these possible reasons.
The first reason why people spend their hard-earned money on the lottery is the hope of winning. People are hopeful that winning the jackpot could change their lives. Whether they want to pay off debt, quit their job or buy their dream home, some people see the small chance of winning the lottery worth it to play. Many view winning the lottery as an easy way to accomplish their financial goals. And for many, the opportunity to be hopeful for a day or two is worth the price of a ticket.
Another main reason why people play the lottery so often is because lottery tickets are cheap. When you spend $2 on a ticket, it doesn’t feel like a big waste of money. Also, if you do win, there’s a huge payoff. Of course, the reality of the situation is, the more you play and more tickets you purchase the more the costs add up. For example, low-income families end up spending hundreds of dollars a year on lottery tickets - turning that harmless $2 ticket into a much bigger financial burden.
Entering the lottery becomes habitual and can become addicting, especially since the tickets are so cheap. Every once in a while, grabbing a lottery ticket at the store is like getting your morning coffee or buying milk each week. Once you get into it though, it can become addicting and it is hard to give up on the chance of buying the lucky ticket.
When you combine all these motivations, you can see why people can get sucked into gambling a percentage of their income each year. If you are purchasing more lottery tickets than you normally would, consider talking with a financial advisor about a more profitable alternative like investing that money in the stock market or putting it towards your retirement savings. Feel free to reach out to one of our trusted financial advisors as they can help you determine if your habit may be hurting your ability to reach your bigger financial goals.
This content is developed from sources believed to be providing accurate information, and provided by Twenty Over Ten. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.