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.
How Much Do Americans Trust the Media?
Media trust among Americans has reached its lowest point since Trump won the 2016 presidential election.
How Much Do Americans Trust the Media?
Media trust among Americans has reached its lowest point in six years.
Gallup began its survey on media trust in 1972, repeating it in 1974 and 1976. After a long period, the public opinion firm restarted the polls in 1997 and has asked Americans about their confidence level in the mass media—newspapers, TV, and radio—almost every year since then.
The above graphic illustrates Gallup’s latest poll results, conducted in September 2023.
Americans’ Trust in Mass Media, 1972-2023
Americans’ confidence in the mass media has sharply declined over the last few decades.
|Trust in the mass media||% Great deal/Fair amount||% Not very much||% None at all|
In 2016, the number of respondents trusting media outlets fell below the tally of those who didn’t trust the media at all. This is the first time that has happened in the poll’s history.
That year was marked by sharp criticism of the media from then-presidential candidate Donald Trump.
In 2017, the use of the term ‘fake news’ rose by 365% on social media, and the term was named the word of the year by dictionary publisher Collins.
The Lack of Faith in Institutions and Social Media
Although there’s no single reason to explain the decline of trust in the traditional media, some studies point to potential drivers.
According to Michael Schudson, a sociologist and historian of the news media and a professor at the Columbia Journalism School, in the 1970s, faith in institutions like the White House or Congress began to decline, consequently impacting confidence in the media.
“That may have been a necessary corrective to a sense of complacency that had been creeping in—among the public and the news media—that allowed perhaps too much trust: we accepted President Eisenhower’s lies about the U-2 spy plane, President Kennedy’s lies about the ‘missile gap,’ President Johnson’s lies about the war in Vietnam, President Nixon’s lies about Watergate,”
Michael Schudson – Columbia Journalism School
More recently, the internet and social media have significantly changed how people consume media. The rise of platforms such as X/Twitter and Facebook have also disrupted the traditional media status quo.
Partisans’ Trust in Mass Media
Historically, Democrats have expressed more confidence in the media than Republicans.
Democrats’ trust, however, has fallen 12 points over the past year to 58%, compared with 11% among Republicans and 29% among independents.
According to Gallup, Republicans’ low confidence in the media has little room to worsen, but Democrat confidence could still deteriorate and bring the overall national reading down further.
The poll also shows that young Democrats have less confidence in the media than older Democrats, while Republicans are less varied in their views by age group.
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