A friend of mine jokes that state and multi-state lotteries are taxes on people who are bad at math. Given the odds of winning, he’s right, if you plan to use the lottery as a retirement vehicle. However, I will occasionally buy a quick-pick lottery ticket, when the prize gets up there in zeroes, because “Hey, You never know.” It’s fun to have the ticket in your wallet and think about what you might do with the winnings.
Then there are people who spend untold amounts on lottery scratch off’s, yet occasionally hit it big. Like Phillip Young, who recently won $1,000,000 on a scratch off ticket. I’m very happy for him, but what appalled me about the story was what the store clerk had to say.
Steve Rahman, manager of the Citgo, said Young stops by the convenience store several times a week and buys $30 to $40 in lottery tickets during each visit.
Even if we assume that the manager exaggerated Mr. Young purchases by double, that’s still $50 a week minimum in scratch offs. If you invested that at a conservative 7%, you’d have your million dollars in about 45 years! That kind of spending on lotteries is what gives them a bad name amongst the regressive tax people. Given my assumptions, plus 10 years of spending on scratchoffs, Mr. Young has lost $38,500.
So, good for Mr. Young, but I hope he develops some better spending habits.