The Economics of the Lottery in the U.S.

If you read these rows, the odds that you have won with the lottery so far are quite small. In 2021, the Americans actually spent 105 and $ 26 billion in the lottery, and prepared for the most famous appearance of gambling. This is more than a combination of all costs for music, books, sports teams, movies and video games. What do we actually get to all the funds spent in the lottery? Also, for example, why many people play with lotteries despite low probability? In the following, we analyze the financial nuances of playing lottery.

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A National Pastime

Lottery has a long history. Lottery was also attracting attention in ancient Rome, and in Europe was used as a reconstruction to procure the construction funds for churches and other community plans. In modern times, lottery is a contradictory line of American life. Recent power balls have set a record of $ 1. 6 billion.

According to the North American Association of Municipal and Provincial Loter (Naspl), lotteries are being carried out in 44 states in the United States and Colombia. In addition, more than 100 states are carrying out lotteries. The lottery has a variety of forms, from instant scratch cards to numeric games like power balls.

Who Benefits From the Lottery

In general, Yankee has allergies to the maximum tax rate, but the highest tax rate for lottery winnings did not cause social reactions. If you win a lottery of $ 600 or more, you must pay the federal income tax. If the winner of more than $ 5, 000 is more than $ 5000, 25 % of the checks will be withholding as a federal tax before watching personal elections. Depending on the amount of victory and your income, you need to pay 14, 6 % to get 39, 6 % as a result, which is considered a higher federal income tax rate.

Even if you live in a state with a state income tax, you must pay these taxes. In some state, income tax is executed by lottery check. If you win, don't forget to mark the salvation funds for tax payment in April and then receive the check. (Note that in 2021, the tax payment was extended until May 17 for COVID-19).

State Governments Win

State governments receive about one-third of lottery jackpots. What does this have to do with corporate tax revenues? According to Reuters, "In 44 states with lotteries (plus counties in Columbia and Puerto Rico), the state receives 44 cents of its corporate income state tax revenue from the gamble." According to the latest estimates, in 11 states, the lottery benefits from the corporate income tax. Some critics point to this precedent, saying tax restraints are being shifted from high-end corporations to the unlucky people who buy lottery tickets.

Some states have a higher chance of winning. Massachusetts has the highest winning rate, at 73%. According to the Tax Fund, "State lotteries, on average, pay out only 60% of their total revenues in prizes (90% in casinos with slot machines and table games).

After paying out prizes and covering operating and marketing costs, states keep the rest of the funds for themselves. In 2010, state lottery revenues were $370 per Delawarean, $324 per Rhode Islander, and $314 per West Virginian.

These cheap lotteries call for serious resources. In 2021, California, Florida, and Massachusetts raked in more than $25 billion in lottery revenues. New York's lottery revenues were $8. 5 billion, Florida's was $90. $100 billion.

Prize Money to Participants

To keep ticket sales at the highest level, each state must pay its fair share of the revenue in the form of prize money. But, of course, this reduces the percentage that can be directed to state revenues, and it applies to exactly these things, such as education, which are considered the guiding condition for the existence of lotteries in the state.

Operational Costs

Even though the lottery is considered one of the main sources of funding for local governments, its profits are not as transparent as ordinary taxes. Buyers generally do not understand what tax rates are hidden in the lottery tickets they obtain. However, the problem of gambling and lottery settlement has the ability to leave in the elections of the United States, the question of how to apply the profits from the lottery sometimes arises due to the fact that these funds are considered "extra".

And, of course, the state must pay money for the use and advertising of the lottery. Often, states pay huge fees to personal marketing companies, which undoubtedly help to grow the implementation of the lottery. From 2003 to 2015, for example, Maine grew its personal bubble on lottery advertising by more than three times.

How Americans View the Lottery

Gallup-Selective Polls found that the lottery of municipalities was actually the most famous gambling image in the United States: Respondents actually take lottery for the past 12 months. He said. With a $ 1-2 ticket, the interest in the lottery has the ability to safely rise. Last but not least, some say that lottery is considered a prey for those who have fallen into dysfunction.

Is the lottery really considered "tax to the poor"? In fact, in the 2014 gallup selection survey, 62 % of Yankee recognized that gambling could be "morally acceptable." Along with this, all six Yankees answered that they were actually playing gambling in professional sports. For example, is there a lottery? According to this survey, the higher the income among Americans, the more likely they are sports gambling, and the lower the income, the more likely they will get lottery and scratch cards. Among all the income groups, people aged 20 to 30 are considered a more intense lottery member.

As a result of wanting to get a lot of resources to get a chance to throw a job, some people start with lotteries. If the lottery is hit, do you throw a job? The answer probably depends on how you are involved in your work and how you experience yourself at work. According to a selective survey by Gallup, 40 % of those who recognize themselves as "not actively involved" in their work said they had quit their jobs if they hit the lottery. 33 % of those who recognize that they are "not involved" have quit, but only 25 % of those who recognize that they are "involved" will quit their job if they win lottery. It would be. For information, experts recommend that lottery winners ignore constructive changes in their lives, and then, for example, the possibility of receiving the election to stay at work. There is a high possibility that it will be a highly (at least shor t-term) meaningful election.

Looking Ahead on Lotteries

What has changed since the first lottery was founded in New Hampshire in 1964? On the other hand, the cost of lottery increased rapidly. With the increase in the jackpot, the large payment bait invited more ticket owners. You understand the most possible, but you don't usually gamble, but the first person who purchased a power ball ticket in January 2016 is for record take.

The $ 70 billion of Americans wastes a lottery sets about $ 230 per person and covers children every year. These are large funds that are not canceled and are not used for credit card debt repayment. Apart from this, according to Pe w-Charitable Trust, this is "more than 10 % of the profit from the collective state budget for the 2014 fiscal year."

The trend of lottery is unlikely to decline. State and local governments depend on lotteries to get revenue that cannot be collected in conventional taxes and bond sales. The former is a popular game, and the latter is a political suicide in many places in the current situation of anti-won, but why should the state be replaced by receiving lottery revenues? ?

Another question in the future is whether the lottery will be applied to all 50 states. Currently, Alabama, Alaska, Hawaii, Mississippi, Nevada, and Uta have no state lottery. Nevada and Mississippi have still earned a lot of income from taxes on other kinds of gambling. Alaska has previously maintained finances with sufficient oil income without relying on lotteries, but the situation may change as it is in a budget deficit.

The struggle over the state lottery will continue in the future. Organizations like Stop Predatory Gambling will continue to question the roles of the state that promotes gambling. On the other hand, some organizations claim that lottery is a fun and voluntary way to raise state funds for education and other programs.

According to the New York Times, there is a fact that "if people with an annual income of less than $ 10 will spend $ 597 a year if they play a lottery." For this reason, some analysts propose gambling more than savings, in other words, to bring the savings for emergency or retirement to the lottery.

Investing vs. Gambling

Many people compare investment to gambling because they are risky for a chance to increase money. However, if you do not want to lose money in the long term, there are several important differences that are much safer than gambling.

Investing is essentially risky, but it is still a kind of activity that has been proven its effectiveness for a long time. Investing in real estate and stock markets may experience shor t-term problems, but both have been proved to grow over the past 100 years.

Gambling, on the other hand, will effectively expose your funds to risk without a return. This is more entertainment than an opportunity to increase funds. This is explained by many of the economic characteristics of gambling and lottery games. < SPAN> The trend of lottery is unlikely to decline. State and local governments depend on lotteries to get revenue that cannot be collected in conventional taxes and bond sales. The former is a popular game, and the latter is a political suicide in many places in the current situation of anti-won, but why should the state be replaced by receiving lottery revenues? ?

The Bottom Line

Another question in the future is whether the lottery will be applied to all 50 states. Currently, Alabama, Alaska, Hawaii, Mississippi, Nevada, and Uta have no state lottery. Nevada and Mississippi have still earned a lot of income from taxes on other kinds of gambling. Alaska has previously maintained finances with sufficient oil income without relying on lotteries, but the situation may change as it is in a budget deficit.

Tips for Investing

• According to the New York Times, there is a fact that "if people with an annual income of less than $ 10 will spend $ 597 a year if they play a lottery." For this reason, some analysts propose gambling more than savings, in other words, to bring the savings for emergency or retirement to the lottery.
• Investing is essentially risky, but it is still a kind of activity that has been proven its effectiveness for a long time. Investing in real estate and stock markets may experience shor t-term problems, but both have been proved to grow over the past 100 years.

Gambling, on the other hand, will effectively expose your funds to risk without a return. This is more entertainment than an opportunity to increase funds. This is explained by many of the economic characteristics of gambling and lottery games. The trend of lottery is unlikely to decline. State and local governments depend on lotteries to get revenue that cannot be collected in conventional taxes and bond sales. The former is a popular game, and the latter is a political suicide in many places in the current situation of anti-won, but why should the state be replaced by receiving lottery revenues? ?

Another question in the future is whether the lottery will be applied to all 50 states. Currently, Alabama, Alaska, Hawaii, Mississippi, Nevada, and Uta have no state lottery. Nevada and Mississippi have still earned a lot of income from taxes on other kinds of gambling. Alaska has previously maintained finances with sufficient oil income without relying on lotteries, but the situation may change as it is in a budget deficit.