Happy birthday, Lottery

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Happy birthday, UK Lottery. I hate you.

It is the twentieth birthday of the UK state lottery. The newspapers are full of self-congratulatory articles about how the lottery has changed the lives of its winners.

And I can’t help thinking that they are all missing the point. The lottery is a fraud, a state-sponsored deception, an abomination, a stealth tax.

Excuse me while I switch into rant mode, DEFCON 3 ….

Let’s start with the numbers. About 50% of the money raised from tickets goes into the prize fund.

28% goes to the good causes fund.

12% goes to the UK Government in tax

10% is spent on running the lottery – the retailers selling the tickets and Camelot.

The lottery is a redistribution system. It takes in money from some people (those who buy tickets) and it gives that money to some other people. And on the way 10% of the money disappears in administration. We are paying someone to move money around. Hmm.

Is the lottery a good bet? No – not even close. The prize pool is half of the income. For every pound that you put in you are going to win back on average 50 pence. If you play the lottery long enough, the law of averages means that you will lose half of what you put in. Those are very poor odds.

Yes, but what about the jackpot, I hear you cry? What about those lucky winners who scoop gazillions and live in luxury? The papers love to tell us about those. It is the dream that keeps us buying more tickets.

It’s not quite so simple. The biggest con is the promise of the untold riches that you could win. Bookies have been using this trick ever since the dawn of civilization. They hook you in with the very  big number that you might win, but they don’t tell you the odds of winning.

So let me tell you. In the main lottery, the odds of getting three numbers right is roughly 57 to 1. You pay £2 for a ticket and you have one chance in 57 of winning £25.

In other words, for every £114 you put in, you can expect to get an average of £25 in three number prizes.

Once the three ball winners have been calculated the remaining winners are divided up with a heavy bias to the jackpot. About 66% of the remaining money goes into the jackpot.

Ah, the jackpot. That’s what you want to hear about, isn’t it? Don’t look at the total amount you might win. Look at the odds – 13,983,815 to one. Call it 14 million to one.

That is a huge number. It is almost too big to understand. Let’s see if we can put it into perspective.

There have been less than a million days since the birth of Christ. We would need to buy more 14 lottery tickets a day, every day, since 1 AD to buy 14 million tickets and give ourselves an evens chance of winning.

The population of London is less than 10 million. Imagine trying to find a person in London by knocking on a door at random or by guessing a phone number. You have better odds of doing that than winning the lottery jackpot.

It is ridiculously hopelessly unlikely. The longest of long shots.

There is something cynical going on about the distribution of prizes. After the three ball winners have been dealt with, the remaining money is divided between those who have picked four, five or six numbers.

As we have seen, 66% of the remaining prize fund goes to those with all six numbers. 22% goes to those with four numbers, but only 4.5% goes to five numbers and 5.3% to numbers balls plus the bonus ball.

Why such a little prize for getting five numbers right? Because Camelot wants jackpots to encourage more people to play. They want lots of small wins so that players get a little reward from time to time. They are not really interested in anything in the middle.

But it’s a bit of harmless fun, isn’t it? A chance to dream? The players know what they are getting into when they buy a ticket, don’t they?

Sorry, but I don’t think so. The UK currently has household debts of over £1.4 trillion. That is on top of our national debt which is, coincidentally, also around £1.4 trillion. In other words we are overdrawn as a nation to the tune of £2.8 trillion. That’s £43,600 of debt for every man, woman and child. Or £108,000 for every household.

The lottery makes a tiny percentage of people richer than they need to be while everybody else gets poorer. And we waste more than 10% on admin in the process.

The good causes. You want to talk about the good causes, don’t you?

Around 28% of the lottery fund goes to the so-called good causes. On top of that, the Government takes 12% in duty. So overall around 40% of the lottery is used to pay for things which benefit other people, right?

Well,  no. Many of the good causes are things that the Government used to fund or used to fund at a higher level. Successive Governments have cut their support for many projects, meaning that these projects have to look to the lottery for help.

So all we have done is to move money around. Instead of paying taxes to the Government to spend on good causes, we are taxed on our lottery tickets in order to give money to (mostly) those same good causes.

That is inherently unfair. The tax system is geared so that the richest pay more and that is how it should be. But the lottery costs the same no matter how much you earn.  People who play the lottery tend to have lower incomes than those who do not.

What we have done is to reduce taxes on the rich by taxing the poor more. It is the exact reverse of the Robin Hood story.

It would take a brave politician to call for the lottery to be scrapped. Lotteries are incredibly popular because we have bought into the jackpot dream that we don’t notice how bad they are.

But what really appals me about the lottery are the mixed messages it sends. It says that we don’t have to work hard. Riches and luxuries can be ours without having to do anything.

It teases us with a fabulous jackpot, whilst hiding the fact that the vast majority of lottery players will lose week after week.

It is a stealth tax which takes money from the less well off, sometimes to support projects that mainly benefit the wealthy.

It plays on our fears. By getting us to focus on favourite numbers we are afraid to miss a draw in case “our numbers come up.”

It takes advantages of our limited understanding of probability. We are being played for fools.

Lotteries are illegal in many countries … except when the Government runs them. Why are non-state run lotteries illegal? Because they prey on the poor, the chances of winning are very low and the income earned from them is too high – just like a state lottery.

The answer is not to ban lotteries. Instead we should help people to understand that they are being conned. And Governments should learn to treat their citizens with respect by being honest with them.

So happy twentieth birthday, UK Lotto. I sincerely hope you don’t make it to your thirtieth, although I strongly (and sadly) suspect that you will.

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2 thoughts on “Happy birthday, Lottery

  1. There is a story that the Prime Minister of the time, John Major, bought one of the first lottery tickets when it was launched back in 1994.

    He suddenly panicked and said “Wouldn’t it look awful it my ticket won?”

    To which one of his civil servants replied. “Don’t worry. There’s very little chance of that happening.”

    Like

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