Gambling is still American’s favorite pastime
What if we told you that there was something you could get at your nearest gas station or convenience store that brings in more revenue per year than all the books, music, video games, movie and sports tickets bought annually combined?
Well, it is true. ¬†And that item which consumes more spending from Americans than virtually every other form of entertainment is the lottery.
In 2016,¬†Americans spent more than $80 billion on lottery tickets, which is more than they spend on movies, video games, music, sports tickets and books – combined.
What Seems To Be Is Always Better than Nothing
Summary:¬†American adults spent an average of $251 on lottery tickets.¬† With a return of 53 cents on the dollar, this means the average person threw away $118 on unsuccessful lotto tickets ‚Äď not a great investment.¬† So why are we spending so much?¬† Well, lotteries are a fun, cheap opportunity to daydream about the possibility of becoming an overnight millionaire (or in this case billionaire), but on the flip side people tend to overestimate the odds of winning.¬†¬†Lower-income demographics spend a much greater portion of their annual earnings on lottery tickets than do wealthier ones.
Since lotteries are state-run, that effectively means that the less affluent pay more in taxes (albeit by choice) than broadly appreciated.¬† And even winning the lottery doesn‚Äôt guarantee financial success.¬† More than 5% of lottery winners declare bankruptcy within 5 years of taking home the jackpot.¬† Despite their drawbacks, though, lotteries are no doubt here for the long haul ‚Äď in states that have lotteries, an average of 11% of their total revenues come from lottery ticket sales, and the number is even as high as 36% in 2 states (West Virginia and Michigan).
Consider the following credit-card-advertisement style sequence of statistics:
Lottery ticket sales in the US in 2010:¬† $59 billion
Average spending per person:¬† $191
Average spending per adult:¬† $251 –¬†Zerohedge
In 2014 it was estimated that American’s spent $119 billion in legalized gambling, and perhaps another¬†$400 billion on illegal sports betting¬†on top of that number. ¬†And this doesn’t include the amount spent online at poker or other casinos which are often international in scope, and do not show up on national statistics.
Ironically for a nation that pays over 50% of their income in taxes and other fees each year, playing the lottery equates to little more than providing Uncle Sam another opportunity to take even more of your money. ¬†But alas, in a country that would now rather spend their cash on experiences rather than assets, it is not a shock to see that the rich are the ones who own profit making sports teams while the poor are the ones losing their money betting on them.
Kenneth Schortgen Jr¬†is¬†a writer for¬†The Daily Economist,¬†Secretsofthefed.com,¬†Roguemoney.net, and¬†Viral Liberty, and hosts¬†the popular¬†youtube podcast¬†on Mondays, Wednesdays and Fridays.¬†Ken can also¬†be heard Wednesday afternoons giving an weekly economic report on the¬†Angel Clark radio show.