Why the Lottery is a Regressive Tax on the Nation’s Poorest
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!
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:
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:
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:
Want more perspective on lottery ticket sales? We previously showed a similar comparison of U.S. consumption numbers in real-time.
Mapped: What Did the World Look Like in the Last Ice Age?
A map of the Earth 20,000 years ago, at the peak of the last ice age, when colder temperatures transformed the planet we know so well.
What Did the World Look Like in the Last Ice Age?
What did the world look like during the last ice age? Was it all endless glaciers and frozen ice? The answer is a partial yes—with some interesting caveats.
The Last Glacial Maximum (LGM), colloquially called the last ice age, was a period in Earth’s history that occurred roughly 26,000 to 19,000 years ago.
This map by cartographer Perrin Remonté offers a snapshot of the Earth from that time, using data of past sea levels and glaciers from research published in 2009, 2014, and 2021, alongside modern-day topographical data.
Let’s dive into the differences between the two Earths below.
The Last Ice Age: Low Seas, Exposed Landmasses
During an ice age, sea levels fall as ocean water that evaporates is stored on land on a large scale (ice sheets, ice caps, glaciers) instead of returning to the ocean.
|Earth's Ice Cover||20,000 Years Ago||Today|
At the time of the LGM, the climate was cold and dry with temperatures that were 6 °C (11 °F) lower on average. Water levels in the ocean were more than 400 feet below what they are now, exposing large areas of the continental shelf.
In the map above, these areas are represented as the gray, dry land most noticeable in a few big patches in Southeast Asia and between Russia and Alaska. Here are a few examples of regions of dry land from 20,000 years ago that are now under water:
- A “lost continent” called Sundaland, a southeastern extension of Asia which forms the island regions of Indonesia today. Some scholars see a connection with this location and the mythical site of Atlantis, though there are many other theories.
- The Bering land bridge, now a strait, connecting Asia and North America. It is central to the theory explaining how ancient humans crossed between the two continents.
- Another land bridge connected the island of Great Britain with the rest of continental Europe. The island of Ireland is in turn connected to Great Britain by a giant ice sheet.
- In Japan, the low water level made the Sea of Japan a lake, and a land bridge connected the region to the Asian mainland. The Yellow Sea—famous as a modern-day fishing location—was completely dry.
The cold temperatures also caused the polar parts of continents to be covered by massive ice sheets, with glaciers forming in mountainous areas.
Flora and Fauna in the Last Ice Age
The dry climate during the last ice age brought about the expansion of deserts and the disappearance of rivers, but some areas saw increased precipitation from falling temperatures.
Most of Canada and Northern Europe was covered with large ice sheets. The U.S. was a mix of ice sheets, alpine deserts, snow forests, semi-arid scrubland and temperate grasslands. Areas that are deserts today—like the Mojave—were filled with lakes. The Great Salt Lake in Utah is a remnant from this time.
Africa had a mix of grasslands in its southern half and deserts in the north—the Sahara Desert existed then as well—and Asia was a mix of tropical deserts in the west, alpine deserts in China, and grasslands in the Indian subcontinent.
Several large animals like the woolly mammoth, the mastodon, the giant beaver, and the saber-toothed tiger roamed the world in extremely harsh conditions, but sadly all are extinct today.
However, not all megafauna from the LGM disappeared forever; many species are still alive, including the Bactrian camel, the tapir, the musk ox, and the white rhinoceros—though the latter is now an endangered species.
Will There Be Another Ice Age?
In a technical sense, we’re still in an “ice age” called the Quaternary Glaciation, which began about 2.6 million years ago. That’s because a permanent ice sheet has existed for the entire time, the Antarctic, which makes geologists call this entire period an ice age.
We are currently in a relatively warmer part of that ice age, described as an interglacial period, which began 11,700 years ago. This geological epoch is known as the Holocene.
Over billions of years, the Earth has experienced numerous glacial and interglacial periods and has had five major ice ages:
|Major Ice Ages||Name||Time Period (Years Ago)|
|1||Huronian Glaciation||2.4 billion - 2.1 billion|
|2||Cryogenian Glaciation||720 million - 635 million|
|3||Andean-Saharan Glaciation||450 million - 420 million|
|4||Late Paleozoic ice age||335 million - 260 million|
|5||Quaternary Glaciation||2.6 million - present|
It is predicted that temperatures will fall again in a few thousand years, leading to expansion of ice sheets. However there are a dizzying array of factors that are still not understood well enough to say comprehensively what causes (or ends) ice ages.
A popular explanation says the degree of the Earth’s axial tilt, its wobble, and its orbital shape, are the main factors heralding the start and end of this phenomenon.
The variations in all three lead to a change in how much prolonged sunlight parts of the world receive, which in turn can cause the creation or melting of ice sheets. But these take thousands of years to coincide and cause a significant change in climate.
Furthermore, current industrial activities have warmed the climate considerably and may in fact delay the next ice age by 50,000-100,000 years.
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