Powerball and Mega Millions are leading a craze. Many people love playing the games and most states love the revenue generated from those selecting potential jackpot numbers and scratch off tickets.
Americans spent some $80 billion on traditional and electronic lottery tickets, according to the North American Association of State and Provincial Lotteries. Each state in the U.S. has its own lottery with the exception of Alabama, Alaska, Hawaii, Mississippi, Nevada, Utah, and Wyoming.
A lottery spending report and analysis released by Hoboken, N.J.-based research firm LendEDU, revealed Massachusetts ranked first with the average resident expending $735.84 on lottery tickets per year. “Of all the uncertainties that come with the lottery, one thing is for absolute certain: People love playing the lottery,” Mike Brown Research Analyst at LendEDU, said in a blog.
LendEDU collected raw information from the Census Bureau’s preliminary data in its 2015 Annual Survey of State Government Finances released on May 15, 2017. Included within this dataset is income and apportionment data of state-administered lottery funds, income generated from ticket sales (excluding commissions), and the apportionment of those sales. Funds generated from each state’s lottery covers prizes for winning tickets and administrative bills with the leftovers going toward various needs.
The United States as a whole made $66,788,035,000 in income generated from all of the states’ respective lotteries; $42,278,889,000 went for prizes, $3,180,173, on administration. The total proceeds remaining totaled $21,352,759,000.
According to CNN, about 63% of the money spent on lottery tickets goes toward prizes. State and local governments receive the remaining funds with most of that, about $16.7 billion, going to education, while $2.5 billion goes into state general funds, and $1.3 billion on social programs. retailers who sell lottery tickets receive about $6 billion, and the last $6 billion or so goes toward administrative costs of running the lottery, including advertising campaigns.
LendEDU took the statistics provided by the U.S. Census Bureau a step further and found the average amount each resident spends in lottery tickets in their respective state. “Residents of Massachusetts spend the most on lottery tickets per capita, and it is not even close,” Brown explained. Massachusetts’ lottery expense per capita came in at $734.85. The next closest state: Rhode Island, where people spend an average of $513.75 per year on lottery tickets; followed by Delaware ($420.82), New York ($398.77), and West Virginia ($359.78).
North Dakotans spent the least on lottery tickets yearly ($34.09), followed by Oklahoma ($43.74), Montana ($53.19), New Mexico ($65.84), and Nebraska ($78.52).
The biggest and most populous states saw the greatest yearly lottery revenues. New York’s yearly lottery revenue was the greatest at $7,783,768,000, followed by California ($5,524,851,000), Florida ($5,277,739,000), Massachusetts ($5,005,635,000), and Texas ($4,281,136,000).
LendEDU wanted to put the probability of hitting it huge with lottery tickets to the test. So, it bought $1,000 worth of scratch-off lottery tickets. LendEDU purchased a wide variety of tickets including two types of $1 scratch-offs, four types of $2 scratch-offs, seven types of $5 scratch-offs, four types of $10 scratch-offs, two types of $20 scratch-offs, and one $30 scratch-off.
The $5 tickets proved to have the highest winning percentage, which was 36.36%. Overall, LendEDU ’s winning percentage: 21.66%.
LendEDU also calculated return on investment on each type of ticket, and only one ticket type, the $20 scratch-offs, gave LendEDU a positive return. “Our ROI from all tickets combined was -2.6%.
“Playing the lottery is an extremely risky investment that, more times than not, drains your bank account and your dreams of retiring on a yacht in Saint-Tropez,” Brown suggested. “Considering the average American spends roughly $206.69 on lottery tickets per year, most people are simply throwing their money away.”
