Why Government Lotteries are the Biggest Scam in the Gambling Industry
A few words about lotteries
A lottery is a form of gambling which is usually conducted by drawing the numbers. These numbers form sequences that for its turn determine whether you win or not and how big your win is.
Players are supposed to buy a lottery ticket in order to be able to participate. Each ticket has got different sequences of numbers on it. The whole procedure is super simple. Players compare the numbers on their tickets with numbers that have been drawn. The more numbers coincide the bigger the winning.
Lotteries are well-known for their enormous winnings. The biggest winning as for now is more than $1.5 billion. However, don’t be mislead by such numbers they are as deceptive as hell.
Why? Since not maximum possible winning determine whether a particular game is appealing for player or not. If not maximum winning does then what? Our parameter to go is House Edge (also called return to player).
House edge (or return to player) in government lotteries
House edge is the main parameter and it dictates how much players lose per each lottery ticket in the long run. The bigger house edge the fewer chances for players to win and the less the prize pool. The same concept is applied in all casino games.
If you play in a game with a house edge, for example, 10%, then every lottery ticket (bet on Roulette, spin in video slot etc.) player suffers losses at the rate of this 10%. Every 100 euro bet causes the loss in the amount of 10 euro (100*10%= 10 euro) (on average in the long run).
House edge in lotteries is terrible for players, with a huge margin in comparison with other forms of gambling, it is usually around 30-50%.
Here some house edge figures for different types of gambling:
Blackjack: approx. 1%
Craps: approx. 1%
Baccarat: approx. 2%
Slots at online casinos: 4% on average
Slots in Vegas land-based casinos: 4-12%
and (drum roll) our "champion" is government lottery with egregious house edge of 30-50%
How and when the house edge is getting cut from government lottery prize pool
It happens after the deadline for selling lottery tickets when the whole prize pool has been put together. In this stage, the organizer of the lottery takes its 30-50% cut and players are left with only another part. From this part, all winnings are going to be paid including the jackpot.
Such a huge administration fee can not be justified by anybody sane. Because when the lottery operator cut 50% from $2billion it basically gets $1billion. Of course, I get that it has some operational costs. But $1billion for printing a few hundred thousands lottery tickets and paying some dude for drawing numbers in front of few cameras? Really?
The cause of such ridiculous high house edge is a monopoly in lotteries
In the majority of countries, the lotteries are monopolized by their governments (including the US, EU, UK). It has been going on for centuries. And states are happy to replenish budgets by lottery money.
According to Reuters article “In 11 states, lotteries provided more revenue than the state corporate income tax in 2009” and in fiscal 2010 profits from lotteries rose to $17.9 billion (all Us states combined).
The whole scheme is quite simple. You are just banning all private companies from organizing the lottery and set your own terms for lottery players. This terms can be whatever the states wish since there are no competitors left.
As I have demonstrated before states take full advantage of players and set house edge for lotteries at unbelievable levels. Also, some countries ban online casinos (for example the US) and, thus, moves their monopoly for another level.
Basically citizens who like gambling have been left no choice but to buy these shitty tickets.
Some countries go even further
Back when I had found out about house edge in government lotteries I was shocked. Unfortunately in some places, it is just a part of the sad story.
So to say, in the US, when you hit Powerball jackpot you are not getting your winning immediately. Rather you can but in such case, you are getting the only ⅓ of your winning. If you don’t want to let the mob loot you, then your winning is supposed to be paid gradually for the next 30 years.
As for me, it is nothing but that the government in a very vile form takes advantage of some people that want their money right away. And it is very understandable desire not to wait 30 years for something that is already theirs.
In response to critics of my position regarding government lotteries
Some people would argue that such enormous profits of government lotteries are going into the state’s budget and will be spent for the public good. Hence, it is not as bad as if some private company would take all profit.
I have to disagree because:
For one thing, jackpot winner must pay taxes. Lottery winnings are not exempted from taxation in the majority of countries. Therefore, today we have a situation when the government have already cut 50% of the prize pool and despite that fact, the winner pays taxes anyway.
Also, if there was not a government monopoly, the profits would be far less than the current 50% rate. Something close to 5% which is 10 times less.
The bottom line is you should stay out of buying any government lottery tickets. If you are seeking to get adrenaline from gambling there are many casino games or slots which would be 10-20 times less harmful for your pocket.