The Lottery Is A Tax On The Stupid
DO you play the lottery? Well, you shouldn’t. Stop right now. Seriously. It’s for stupid people.
In fact, I’d go so far as to say the lottery is a tax on the stupid.
Or rather it’s a tax on those who can’t do maths.
You are not going to win the lottery. Ever.
Stop dreaming of a Willie Wonka-style golden ticket unlocking vast riches and changing your life forever. It ain’t gonna happen. Sorry.
It couldn’t be you
I don’t do the lottery because the odds are overwhelmingly stacked against the player. And I don’t like flushing money down the toilet on some millionaire fantasy.
It’s simple maths really.
The odds are 45 MILLION TO ONE that your ticket will scoop the jackpot. That means it’s almost impossible.
To put it into perspective, the chances of anyone being attacked by a shark is 11.5m-1 — nearly four times as likely.
The odds of you becoming a movie star are 1,505,000-1 — 30 times as likely.
The odds of being killed by lightning are 134,906-1 — 333 times as likely.
The odds of dying in a plane crash are 7,178-1 — over 6,000 times as likely.
The odds of being born with extra fingers or toes are 500-1 — over 90,000 times as likely.
Don’t take the gamble
Playing the lottery is definitely gambling, rather than investing. If you do not win a prize, you lose your money.
That’s why I believe it’s a voluntary form of taxation. People willingly hand over their hard earned cash in the microscopic hope of a big win.
Whether they do this because they are stupid, can’t do maths, are dreamers, or just want a bit of fun, it all boils down to the simple fact that it’s a waste of money.
But hope of a big win makes people irrational. They think: “It’s only a couple of pounds/dollars/euros, let’s go for it.”
But if they read this article and thought about the actual probability of winning, maybe they would save that cash and invest it instead.
People tend to overestimate positive outcomes and underestimate negative ones.
If someone told you today you have a 1-in-45m chance of being eaten by the Loch Ness Monster, you wouldn’t worry about it because it’s so unlikely.
So why are the same odds for winning the lottery jackpot more likely?
A slightly better bet
If you’re in the UK, you could always buy Premium Bonds.
Rather than being paid interest, you are entered into a monthly draw with two £1million tax-free jackpots and other prizes from £25 to £100,000.
The odds are still against you
The chances of winning a jackpot is 26.9 BILLION TO ONE. And the odds of winning any prize is 26,000-1.
NS&I claim that Premium Bonds pay an equivalent return of 1.35% a year. But, here’s the rub, this rate is the same no matter whether someone has £1 or £50,000 invested.
And, if you think about it statistically, the small number of very large winners distorts this figure, so many people will earn less than 1.35%. Some will earn nothing at all.
The main benefit of Premium Bonds over the lottery is punters cannot lose money. They can cash in their bonds at any time.
However, the longer you hold the bonds, the more inflation will reduce the value of the money invested in real terms.
You won’t be an overnight millionaire
But don’t worry. You can still hit seven figures and become wealthy. It just takes more time by saving and investing.
Gambling is for mugs. There are no get-rich-quick schemes. Only get-rich-slowly ones.
Do you think the lottery is for stupid people? Or is it just a bit or harmless fun? I’d love to hear from you in the comments below. If you found this article helpful, please share it using the Twitter icon. Thanks for reading.