WARNING: LONG READ AHEAD
I am truly sick to my stomach after analyzing the numbers of the PA Lottery.
I'm using PA as an example, but Im sure whatever state you live in, the numbers are most likely similar. Right now, for every dollar in ticket sales, only $0.38 is returned to the players. I always believed the numbers were closer to 50/50, but thats not the case. So right now, if PA sold $1,000,000 of Cash 5 tickets, the pool is only going to be around $300k-$400k. Pretty significant chunk of change taken out in my opinion.
I once knew of a bookie who actually ran a numbers operation based off of the pick 3. I always wondered how he was able to pay twice the odds that the PA Lottery did. Now I know why these illegal operations exist.
Hey I'm all up for gambling benefiting a good cause, but when it exceeds more than 50%, I think major reform needs to take place. Overall, the lottery is a sucker game for players. I don't care if you use some kind of system that you think works, the fact of the matter is that 99.99% of all lottery players will be losers in the LONG RUN. Yes, there have been some lucky people out there to win huge amounts of money, including myself, but if everyone here was going to play regularly for 1,000 years straight we all would be losing players because of the payout structure of any lottery out there.
In my opinion, the amount taken from the pool should be capped around 33%. This would eliminate some of the illegal gambling that takes place based off the state lotteries and would also return a significant amount to the players. If it wasn't for the players, these games would not exist and there would be ZERO benefits to the state. I don't know the exact numbers, but how many big wigs at the PA Lottery do you think make more than 6 figures a year in salary. The operating costs are ridiculous and if you just happen to work for the lottery you should be ashamed. If they can't operate with a budget of 1/3 of over $4 BILLION then they really aren't trying in the first place.
That's my first beef. Not enough is returned to the player.
Now look what happens if youre lucky enough to win. Already, the state has taken 62% of what has been gambled. Let's say hypothetically you win a jackpot with a cash option worth $10,000,000. We got to feed Uncle Sam so we can go build bridges (wink, wink), better roads (haha), and of course make more nuclear bombs that could destroy the world a billion times over.
So out of that $10,000,000 you just won, Uncle Sam is going to want 35%. The State of PA is still hungry and will want another 6%. In my opinion, this is double taxation at least at the state level. Oh, and lets not forget that you must pay social security, unemployment, medicare, and local taxes. Another couple percent right there.
Overall, out of that $10,000,000 you're going to be left with somewhere around $5,600,000 if you live in the city of Pittsburgh. Yes, there are ways to reduce you're tax bill but that's another post. So mathematically speaking, out of $25,000,000 put in by the players, the actual winner only receives about ONE-FIFTH (20%). WOW, pretty sick huh. The winner gets around $5m after taxes, and the government gets around $20m. Insane. Ridonkulous. Excuse me while I puke.
It gets better. Let's say you now want to buy a $500,000 house right outside the city you live in that has a nice view. Guess what, if it's a new one, the property, school, and municipal taxes on it are going to be around $12k-$15k a year depending of the tax district of course. So let's assume you got good advice and have $4m or so resting in a safe place earning you 3% a year. The economy sucks right now that that's probably the best "safe" rate you'll get. So that safe account is going to earn you approximately $120,000 a year BEFORE taxes. Of course you can yield a higher return, but the risk also goes up with that kind of thinking. Call me a sucker for safe money I suppose. I don't got the nerve nor patience to play the stock market. So let's assume you have a very good accountant and you clear $80,000 a year. Throw in your property taxes and other taxes, you're left with about $65,000 a year. Hey, not bad at all for really not doing anything. However, that's certainly not the lifestyle you dream of when you win a $10,000,000 jackpot. Throw in expenses, insurances, utilities, and you finally realize you can't do all those things you wanted to do without touching the principal. This is the number one reason why a lot of winners go broke. It's because they don't realize the tax ramifications on having such a large amount of money, and some basically overspend immediately and dig themselves a hole right off the bat. And oh yeah, don't you dare try to help out a friend or family member because you'll be paying tax on anything you give them over $12,000.
You're probably thinking yeah I know this or so what, but I'm just pointing out how the players get screwed for the most part. In the long run, you could correctly say the government will get every single cent of what's played by either taking it from the get-go or taxing the hell out of you.
So when you elect me president (lol), I will reform how the lotteries operate and return more to the players. I will also eliminate all federal, state, and local tax on lottery and gambling winnings like some other countries do. So when Uncle Sam says hey feed your piggy bank so you can retire, I ask him, will you leave me some so I can do this? Right now as a new grad of Pitt, I'm begging to even get a job in this horrible economy.
:End Rant
