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Playing The Lottery & Gettin’ Rich

We all know the odds to win the lottery are bad. But, just how bad? People have trouble putting the very long odds into context. They are numbers that are far larger than most of us can imagine. We also have trouble putting time and savings into context. This is one reason the savings rate in the United States is so abysmal.  We’ll I’m here to help!  Here are some shocking numbers about playing the lottery and getting rich:


A Chance To Win

Here’s the most common argument in favor of playing the lottery: If you don’t play, you can’t win.  Plus, it’s fun. 


True, and true! It is undeniably true that if you don’t play you can’t win. Just like becoming an NBA player or the President: if you don’t try, it won’t happen. Except your odds of winning the lottery are much, much worse.


And yes, it can be fun, so long as you don’t mind parting with one or two dollars. For those of us who buy a ticket on rare occasions, because it’s entertaining, I say power on!  No harm, no foul.  But for those of us who buy a ticket thinking (hoping) it could be your ticket to freedom, you may want to think twice.


And the argument against playing the lottery, is, of course, the disgusting odds.  They say the lottery is a tax on people who are bad at math.  (No, it’s not actually a tax on people who are bad at math, everyone calm down.)


Disgusting House Odds

Each lottery ticket you buy comes with a disgustingly low possibility of winning. For Mega-Millions, it’s purportedly 1 in 259 million.  For Powerball, it’s 1 in 292 million.


The problem is that it’s hard for the human mind to put those kids of odds into perspective.  We know it’s small odds, but just how small?  Here’s some context to give you an idea:


  • If each lottery ticket were a second of time, you would have a better chance to pick the winning second out of the next 9 years!
  • If each lottery ticket were a minute, you’d have a better chance to pick a single minute out of 500 years.
  • If each lottery ticket were a day, you’d be better off picking a winning day since modern humans evolved (200,000 years).  Actually, you can go four times further back in time, and still have better odds of picking a winning day.
  • If you count 10,000 numbers a day, every day, it would take you eighty years to count up to your odds of winning the lottery.  Your chance of winning the lottery is just one number on one day of those eighty years.
  • If each lottery ticket were an inch, you would have a better chance to pick the winning inch from New York to Los Angeles, and halfway back again.
  • If each lottery ticket were a single drop of water, you would have a better chance to pick the winning drop out of four Olympic-sized swimming pools.
  • A penny weighs 3.1 grams.  To see comparable odds of winning the Powerball by weight, you would need no less than four fully-loaded Boeing 747s (about 200,000 kg each) vs. your one penny.
  • You are 21,000 times more likely to be struck by lightning during your lifetime.
  • You’re over 400 times more likely to be struck and killed by a meteor.
  • You are more than twice as likely to be killed by a vending machine (p.s. Don’t shake that vending machine!).

I don’t know about you, but I don’t call those odds long.  I call them impossible!

Odds of Winning The Lottery Worse Than Killed by Vending Machine - Playing The Lottery & Getting Rich


Playing The Lottery: What People Spend

Overall, we spend over $70bn per year on lottery tickets in the forty-three states with lotteries.  That’s more than Americans spend on music, movies, books, video games, and sports teams, combined.


In those states, the average person spends about $230 per year.  That’s an average. There are many people who don’t play at all, and others that spend much more.  In some states, like Rhode Island, Massachusetts, and Delaware, folks spend well over $600 per person per year, while in other states, the figures are less.


But, let’s work with the average. Since the U.S. average household size is 2.5 people, that means your average household spends $575 per year on lottery tickets. And since the median household income is right about $60,000, then you might say that a typical household spends close to 1% of their income on lottery tickets. Some spend far more, and some spend far less.


The U.S. Savings Rate

Now let’s look at the U.S. savings rate.  The average U.S. household savings rate is currently at about 3%.  Wow! Average households are saving 3% of their income, but spending 1% on lottery tickets! Damn, folks must seriously not be good at math.


But, upper income households save at higher rates and lower income households save less.  In fact, households in the bottom two quintiles by income typically have negative or near-negative savings rates, according to a calculator from DQYDJ based on data from the Consumer Expenditure Survey.

U.S. Savings Rate 1959 - 2017


Poor people play the lottery at much higher rates than rich people.  It would be reasonable to assume that below-average income households also spend a much higher percent of their income to play the lottery than richer households.  In fact, lower-income households probably spend well over 1% of their income to play lottery, on average.


Considering the impossible odds of playing the lottery, that’s a sad situation for households with negative or near-negative savings rates.


Investing Instead

What if you invested your lottery money instead? This is a blog about financial freedom, and I’m sure most readers know the answer to that one.  Obviously, you’re going to be better off in the long-run by saving instead of playing the lottery.  But, by how much?


If the average household spends 1% of their income (or $575) per year playing the lottery, here’s what investing in the S&P 500 instead looks like over time:

5 Years$4,532
10 Years$11,890
20 Years$40,947
30 Years$110,689
40 Years$278,080

Assumes historic compound annual return rate of 9.15%, with dividends reinvested, and annual annuity growth of 2.5% (approximate rate of inflation).


So, yeah, over a typical forty-year career, the average U.S. household could be expected to save nearly $300,000!  That’s more than the median retirement savings for people in their 60s!  Just by avoiding the lottery, and investing instead!


Now, I tend to be a live-and-let-live, libertarian kind of guy. But dammit if the lottery isn’t a scourge! The typical family is giving up a secure retirement in exchange for impossible odds!  Poor households? They’re giving up all hope whatsoever.


The average American family is squandering their retirement savings by playing the  lottery


How Much Do You Spend On The Lottery?

There’s a rule of thumb I like to use to determine how much any spending habit costs over time. I call it “The Frugal Rule of 20“.  Basically, it says that if you invest your money in the S&P 500 instead of spending it, after 10 years, you’ll have about 20-times your annual savings.  So, for example, if you spend $1,000 per year on fancy lattes, by saving and investing that money instead, you’d have $20,000 in ten years.  Are your lattes worth that?


It’s just a rule of thumb, but it gives easy ballpark estimates.  So, how much do you spend on the lottery? The average person in Rhode Island spends nearly $800 per year, or $2,000 per household.  That’ll be $40,000 for a household in 10 years if they invest instead.


Over forty years, you can expect to save nearly 500 times!  The average Rhode Island family is giving up a cool $1,000,000 in retirement savings – more or less.  But yeah, maybe they can pick the winning minute out of 500 years instead. Let it roll, baby! #givehopeachance


Related Content: The Chance To Save $1M

The Chance to Save $1M


Playing The Lottery: Entertainment Value

And so, you can see that if you’re playing the lottery to win, you’d be better off building a bunker to protect yourself from meteors.  But, there are those who play mostly for the entertainment value.  It is cheaper than a movie, after all.  If you’re like the roughly 5% of Americans that are fully squared away on the whole financial independence thing, then whats wrong with a few dollars here and there on a moon shot?


Nothing at all.



Jojo Bobo



Title photo credit: alteration of Day 89: “Millionaires” by Sean Freese on Flickr under Creative Commons 2.0

3 Responses
  • Steveark
    January 25, 2018

    Great presentation of what long odds look like in examples people can get their heads around. In my case I have bought exactly zero lottery tickets in my life. I got one as a gift once and it ended up being a $2 winner but I lost it before I could cash in for my two bucks, that still stings a little! Normally I like regressive taxes since our system is so “progressive” but it doesn’t feel right that mostly poor people paid part of my kids college education through lottery funded scholarships when I could easily have cash flowed it myself.

    • JoJoBoBo
      January 25, 2018

      Hey thanks! I liked those too. The only time I ever have played the lottery is when my work colleagues were all going in on a pool. I didn’t want to be the only one left in the office if they won!

  • Ann
    January 29, 2018

    Yes, and I buy 1 of those silly scratch-offs a couple times a year, usually scratch it off with my grandkids Entertainment, no more. Good read of stats.

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