Vanquish Poverty with the Lottery (and take home a million!)

The lottery intrigues us. And for good reason. It appeals to our humanness. And it has a long history. The Chinese are believed to have financed the Great Wall of China with a lottery. New Jersey-ites decided which colonials should fight the British by lottery.  Queen Elizabeth I chartered the first official lottery to be designed as a means to do public work.
The lottery appeals to the human traits of eternal hope, of personal destiny; it satisfies our need for risk behavior and the desire for instant gratification, all of which define us. And we are drawn to its dark side, the numbers games that are so profitable to racketeers.
The lottery has moved constantly between crime and politics, between mob coffers and state coffers. The game lately has justified itself as a means toward community benefit. Most states now have a lottery system realizing huge profits that are returned in part as prize money for a few lucky individuals and, after administrative costs, in part to the community to meet its needs. Two multi-state games exist, PowerBall and MegaMillions, that are subscribed to by almost all of the states, with the two notable exceptions of Hawaii and Alaska. Portions of the profit from those games are divided by state members.
Being taxed has never been more fun.
And some prizes won by individuals are staggering, in the multi millions of dollars.  A Morristown, New Jersey school board member, for instance, won the March 13, 2010  Powerball jackpot to the tune of $211.7 million. When I hear about such large winnings I find myself doing the math. Had the game been organized differently, 211 people might have won one million dollars. I ask myself, would we really rather watch one person receive an un-spendable amount of money than spread the wealth to 211 people, or even 422 people? Intrigued by the possibilities, I decided to do some research (and some math).
My present home state of California, for example, received almost 3 billion dollars from its 2009 lottery ticket sales. In that year California put 50% of those receipts toward prize money, 34% toward education, and the remaining 16% toward administration. In 2009 California had a population of 19,953,134 souls, 14.2% of whom existed below the poverty level. Now just suppose California, in that one year alone, decided to take that prize money,  {50% of 3 billion dollars (1.5 billion dollars)} and instead of awarding huge prizes to just a few winners, divide that amount among all of its citizens, all 19,953,134 people. I did the math. Had my state done that, every citizen would have been awarded over 75 million dollars.
Whoa! What? This can't be right. If this were true, in that one year alone the California lottery and state officials held in their hands the means to completely eradicate poverty in California. More than that, to make California the wealthiest state per capita in the United States. Maybe in world.
Something had to be wrong with this picture, I thought. I decided to explore other states. I thought about New Jersey, where that woman serving on the school board of my old alma mater won the $211.7 million. In that year, 2010, the population of New Jersey was 8,791,894, 9.4% of whom resided below the poverty level. I learned that  the New Jersey Lottery had broken its own record in terms of ticket sales for the fiscal year 2010, a record $2.6 billion in ticket sales, the most in its history. And it came amidst one of the biggest global recessions in recent history. It seems that those who don’t normally play lottery games do so during harder times in a bid to change their fortunes. I could find no firm percentage for the division of lottery receipts in New Jersey, but I did find that in 2006 the state claimed it put 59.2% toward prizes. This may have changed, but I decided to assume  a nice round fifty percent for my purposes and did the math once again. So, 1.3 billion dollars divided among 8,791,894 New Jersey citizens in 2010 alone comes to over 147 million dollars each.
Holy smokes.  How could this be?
I looked at one more state, Pennsylvania. In this state 60.9 percent is paid out as prizes, 29.9 percent goes to programs, 6.7 percent is paid as retailer and vendor commissions and 2.5 percent is consumed as operating expenses. In the fiscal year 2010-2011 the Pennsylvania State lottery had sales of 3.2 billion dollars. Sixty percent of 3.2 billion is 1.92 billion. With a population of 12,702,379 in 2010, an equal division of the prize money that year in Pennsylvania would have awarded 151 million dollars to each and every citizen.
But where is all that money coming from? As we saw from the numbers, even if everyone in the state bought a lottery ticket the amount would not begin to approach the actual ticket sales. Of course, unclaimed prizes grow with interest, quite quickly.  And people buy multiple tickets. Many, many tickets, I learned. Imagine: once a jackpot approaches enough millions of dollars to become a reasonable investment, well funded individuals and corporate groups could buy a high percentage of number combinations in certain games, virtually ensuring a profit. In one year in the Virginia lottery, an investment group "came tantalizingly close to cornering the market on all possible combinations of six numbers from 1 to 44. State lottery officials say that the group bought tickets for 5 million of a possible 7 million combinations, at $1 each, in a lottery with a $27 million jackpot. Only a lack of time prevented the group from buying tickets for the remaining 2 million combinations".
And foreign interests get involved as well. It was an Australian group behind the effort described above. And apparently they were successful. Here at home, a New York investment firm recently bought up massive ticket amounts in an upstate New York lottery. The treasurer of the firm said that "he performed a risk assessment for large-scale investments in such a game and found that a profit could be made if played properly".  States have since taken measures to make such "buy-outs" more difficult. But they cannot be prevented entirely.
But there is another reality, a sadder reality. Research confirms the those who can afford it the least tend to pay the most in terms of percentage of income. A Washington Post investigation of the Virginia, Maryland, and District of Columbia lotteries found that they "rely on a hard core of heavy players, who, on average, have less education and lower incomes than the population as a whole. The 1995-6 Virginia Lottery sales were concentrated in 8 percent of Virginia's adult population, who accounted for 61 percent of Lottery sales. Those heavy Virginia players on average spent $47 for lottery tickets in two weeks, the equivalent of more than $1,200 annually. Yet one in six had household incomes of less than $15,000."        
Clearly, some players play desperately.
And so I pondered the possibility of a redistribution of prize money in a way that benefits more people. Smaller prizes of, let's say, one million dollars each. Who would not be satisfied with one million dollars? You'd be surprised. I learned that when prizes are smaller, fewer people purchase tickets. The MegaMillions blog confirmed this. "…we actually started that game," the representative said. "No one played." The United States apparently enjoys the accumulation of massive wealth as a spectator sport, a competition in which a few manage to grab most of the pie while the majority of us watch, fascinated. We would rather posture and compete, we would rather admire and envy, we would rather look down in our turn upon the less fortunate, than make a serious attempt to eliminate poverty.
The Chumash band of Indians in my local Santa Ynez Valley must be chuckling at this. The band runs a casino (which tribe does not?) which is, to say the least, profitable. And no tribe member is left out. Much of this information is confidential, yet I did learn that in 2007 the tribe paid each of its members $30,000 a month from casino earnings (Slate, March 5, 2007). They know how to take care of their own.
And so I propose that my state do the same. Announce that every citizen of the state who buys a lottery ticket at least one time during the year will receive one million dollars at tax time. Then skim 36 million of the total lottery ticket sales for one year from the prize money for that purpose, leaving only 1.465 billion (so sorry, California!) for the jackpots. Pay the million dollars out to each citizen who played (only 18 and over legally). And keep what remains after distribution of the 20 million as a tax adjustment. How's that for an economic boost?
Is this too simplistic? I will be told so, no doubt. I'm sure state officials will quickly offer reasons why this would never work. But I hold to a core view: if Americans truly wish to eliminate poverty, we could do so. Not some distant time in the future. Right now.

For those still unaware, tongue is firmly in cheek! RLG