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Why the Lottery is a Regressive Tax on the Nation’s Poorest

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Every year, Americans spend a mind-blowing $70.1 billion on the lottery. That works out to an average of $630 per household, representing more money spent on gambling than on books, sports tickets, recorded music sales, video games, and the movie box office – all combined!

U.S. consumption of lottery tickets

This is according to data visualization expert Max Galka, who published a series of posts and visualizations on the economics of the lottery in his Metrocosm blog. The numbers he provides are both astounding and alarming, ultimately making a convincing case that the lottery is a regressive and inefficient tax on some of the nation’s poorest people.

Let’s start with the economics. Here’s the math on the New York Lottery, which is a starting point to understanding the inefficiency behind lottos in the first place:

New York Lottery diagram

To sum up the math:

  • 51% of each dollar goes to tax revenue: federal, state, and municipal.
  • 18% goes to covering expenses, such as advertising or retailer commissions. This is the part that makes the process inefficient.
  • 31% of each dollar actually goes to the prize money, and that basically sums up the terrible odds behind winning in the first place.

In other words, for every $3 spent on the New York Lottery, less than $1 is paid out to winners, while the other $2 is going to expenses and tax revenues.

The House Advantage

As Max notes in one of his posts, the lottery itself is not a tax – but the artificially inflated price of lottery tickets ultimately ends up as an indirect excise tax:

House Advantage in Lottery

Choosing to play the lottery is voluntary. But much like sales taxes, the inflated price of lottery tickets is not.

It is illegal for anyone but the state to run a lottery. So unlike casinos, which face competition from other casinos, lotteries operate as a monopoly, so they can set their pricing artificially high, or equivalently, their payout rates artificially low.

While it is true that many people stay away from lottery tickets because the odds are not in their favor, there are groups of people that are far less fortunate. They and their families bear the brunt of inefficient lotto economics, as well as the house advantage.

Who’s Buying Lottery Tickets?

Lottery sales follow the 80/20 rule. It turns out that 82% of all sales come from 20% of the players.

Many of these players are compulsive gamblers, and many also come from lower income brackets.

In this post, which includes some key assumptions, Max shows that the “lottery tax” is a significant burden for many low-income households even in contrast with other taxes:

Lotto Tax

Want more perspective on lottery ticket sales? We previously showed a similar comparison of U.S. consumption numbers in real-time.

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Maps

Mapped: Chinese Provinces With Cities Over 1 Million People

Some Chinese provinces are so populous they rival entire countries. But how many of them have cities over a million people?

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A cropped map of all the Chinese provinces with cities over 1 million people.

Mapped: Chinese Provinces With Cities Over 1 Million People

This was originally posted on our Voronoi app. Download the app for free on iOS or Android and discover incredible data-driven charts from a variety of trusted sources.

Almost two-thirds of the 1.4 billion Chinese population lives in an urban area. But how does this play out across the country’s geography?

This map shows the Chinese provinces with cities over a million residents. Data for this graphic is sourced from citypopulation.de.

Ranked: Chinese Provinces With Cities Over 1 Million People

China’s Guangdong province has 17 cities with a population size of 1 million or more. It is also China’s most populous province, home to 127 million people. This makes it comparable to the size of Japan, the 12th most populous country in the world.

RankProvinceCities With 1 Million People
1Guangdong17
2Jiangsu12
3Shandong9
4Hebei6
5Zhejiang6
6Liaoning5
7Guangxi*4
8Henan4
9Anhui3
10Fujian3
11Heilongjiang3
12Hubei3
13Hunan3
14Inner Mongolia*3
15Jiangxi3
16Jilin2
17Gansu2
18Shaanxi2
19Shanxi2
20Sichuan2
21Xinjiang*2
22Beijing**1
23Chongqing**1
24Guizhou1
25Hainan1
26Ningxia*1
27Qinghai1
28Shanghai**1
29Tianjin**1
30Yunnan1
31Hong Kong***1
32Macao***1

*Autonomous Region. **Direct-Administered Municipality. ***Special Administrative Region.

Jiangsu, ranked fourth in population overall, is the only other province which has 10+ cities with a million or more inhabitants.

Meanwhile, some of China’s most populous cities—Shanghai, Beijing, Tianjin, and Chongqing—are administered directly by the central government, and do not fall under provincial control.

In fact, Shanghai and Beijing have informal “population caps” to prevent them from growing larger, in a bid to reduce pollution, overcrowding, and pressure on public services.

On the other hand, Tibet’s cold climes and rugged terrain make for a sparsely-populated area, totalling 3 million people across 1.2 million km². Tibet is the only province-level division in China without a single city over a million residents.

All together, China has 105 cities with more than one million inhabitants. For comparison, India has 65, and the U.S. has nine.

Learn More About Population Metrics from Visual Capitalist

If you enjoyed this post, check out Interactive Map: The World as 1,000 People. This visualization shows how unevenly people are distributed across the globe, re-imagining the entire 8 billion human population as only 1,000 people.

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