How does lottery work?

[onlyrp]

Ok, I know it's a gambling and guessing game, where the lucky man wins a jackpot of millions.

My question is this, if the goal is for the government to collect taxes, why not just tax on the ticket purchase, and reduce the allocated prize amount? In which case, you can report the "net" amount, and make it tax free to the winner?

For example, if the jackpot is $100M, does that mean they sold 100M tickets for $1 each? If so, why not just tax the prize in advance, and declare that, if the effective tax rate is 30%, there's only $70M as prize money claimable, and the winner does not need to report any additional taxes?

Would that just make too much sense and put too many people out of business?

[BamaAla]

Ok, I know it's a gambling and guessing game, where the lucky man wins a jackpot of millions.

My question is this, if the goal is for the government to collect taxes, why not just tax on the ticket purchase, and reduce the allocated prize amount? In which case, you can report the "net" amount, and make it tax free to the winner?

For example, if the jackpot is $100M, does that mean they sold 100M tickets for $1 each? If so, why not just tax the prize in advance, and declare that, if the effective tax rate is 30%, there's only $70M as prize money claimable, and the winner does not need to report any additional taxes?

Would that just make too much sense and put too many people out of business?

I can't speak to you plan, but I'll tell ya how the lottery works for me: I hop in the car and ride the 50 miles to Tennessee (since lotto tickets are a sin in Alabama,) buy about $50 worth of tickets, drive the 50 miles back to the Heart of Dixie, watch as my numbers aren't drawn, repeat again when the jackpot surpasses $125m. The only thing I do that is more mindless is sticking Skoal in my mouth every day...they are both pretty fun though!

[Danke]

The only thing I do that is more mindless is sticking Skoal in my mouth every day...they are both pretty fun though!

Skoal Extra for the win.

[WilliamC]

I can't speak to you plan, but I'll tell ya how the lottery works for me: I hop in the car and ride the 50 miles to Tennessee (since lotto tickets are a sin in Alabama,) buy about $50 worth of tickets, drive the 50 miles back to the Heart of Dixie, watch as my numbers aren't drawn, repeat again when the jackpot surpasses $125m. The only thing I do that is more mindless is sticking Skoal in my mouth every day...they are both pretty fun though!

Redneck

[enoch150]

States already keep a good chunk of the money before the payout. Then they tax it again, after someone wins whatever they pay out.

Massachusetts has the highest payout of lotto sales: 71.9%.
Louisiana has the lowest payout of lotto sales: 51.0%

http://media.bloomberg.com/bb/avfile/r3nbpFLrUooE

A quote from the article: "According to Bloomberg's study, state-run lotteries 'have the worst odds of any form of legal gambling' in America."

http://www.dailyfinance.com/2012/03/...D147238_maing5

[thoughtomator]

Here's how it works...

Step 1) gov't puts population through 12 years of "schooling" that conveniently fails to teach them how to apply simple math to something like the lottery.
Step 2) ????
Step 3) Profit


there's underpants in there also somewhere I think

[fr33]

I call the lottery "the tax on stupid". And now my wife bought into a Mega Millions pool at work.

In many states gambling is illegal but state sanctioned gambling, aka the lottery, is a monopoly with extremely low odds of winning.

[FindLiberty]

I call the lottery "the tax on stupid"...

Try, "Voluntary tax for mathematically challenged optimists."

[gerryb]

Try, "Voluntary tax for mathematically challenged optimists."

We're not even mathmatically challenged!

The odds of winning are 1 in 176 million. The payout is double that. Looks like a sound investment to me

[psi2941]

Try, "Voluntary tax for mathematically challenged optimists."

i'm have a math degree and i still bought a lottery ticket. It sure beats putting money into BTC :P

side note, with your logic and reasoning I should vote for Romney because Ron has no chance of winning.

[alucard13mmfmj]

let's hope one of us wins and Ron gets a few million into his campaign's coffers =p

[fr33]

let's hope one of us wins and Ron gets a few million into his campaign's coffers =p

First thing I'd do is finish maxing out my donations :P

[Carson]

Oops! Double post.

[Roy L]

i'm have a math degree and i still bought a lottery ticket.

LOL! That reminds me of a friend who actually has a PhD in math, but couldn't afford a down payment on a house until he won a medium-sized lottery prize! True story.

side note, with your logic and reasoning I should vote for Romney because Ron has no chance of winning.

Nah. The supply of your vote is fixed. Think about what that implies.

[onlyrp]

LOL! That reminds me of a friend who actually has a PhD in math, but couldn't afford a down payment on a house until he won a medium-sized lottery prize! True story.

Nah. The supply of your vote is fixed. Think about what that implies.

Haha, funny story.

[Victor Grey]

i'm have a math degree and i still bought a lottery ticket.

You is? Well good.

Try, "Voluntary tax for mathematically challenged optimists."

Nah. Tax on the stupid is better.

I won't play the lottery unless it's gotten over 300 million. Still dumb to do it. More likely to be struck by lighting twice.
I just like waving goodbye to money I suppose. It's good to dream.

[psi2941]

You is? Well good.

with the same argument you have for the lottery i can say donating to the Ron Paul Campaign is the same thing.

[Roy L]

I call the lottery "the tax on stupid".

State-run lotteries are indeed a tax on stupidity -- which is in general a good thing to tax. However, as the stupid tend not to have very much money, its revenue potential is extremely limited.

[Son of Detroit]

I bought my first ever lottery ticket today. I wasn't even carded, which kind of angered me.

[Kodaddy]

I have a theory that you have almost the same chance of winning the lottery if you don't buy a ticket as you do if you buy a ticket.
(i once found a ticket in the parking lot that was a $5 winner. Also, my mom puts 5 tickets in everyone's Christmas stocking and Easter basket.)

[dannno]

I think the idea is to keep lottery winnings in the same category as gambling winnings as far as the tax code is concerned, an excemption of certain types of gambling winning would just be more confusing.

On the plus side, if they at least give them to you then you can use some of the money on stuff that can get you a tax break.

[fr33]

As much as I don't care for the lottery, the fact that my wife invested in a pool of tickets now has me daydreaming how it would change my life. It must play upon some basic human instinct or something.

[onlyrp]

As much as I don't care for the lottery, the fact that my wife invested in a pool of tickets now has me daydreaming how it would change my life. It must play upon some basic human instinct or something.

To people like your wife, is winning 2 million much different than, 20 million, 200 million?
In all cases, you'll be debt free, set for life, and you'll die the same year.

[brandon]

As much as I don't care for the lottery, the fact that my wife invested in a pool of tickets now has me daydreaming how it would change my life. It must play upon some basic human instinct or something.

That's the best part about the lottery. I think that's why most people play - paying a couple dollars for a sweet daydream. Probably worth it.

To people like your wife, is winning 2 million much different than, 20 million, 200 million?
In all cases, you'll be debt free, set for life, and you'll die the same year.

Definitely not set for life with $2mil. That only equals out to about $50,000/year.

[donnay]

That's the best part about the lottery. I think that's why most people play - paying a couple dollars for a sweet daydream. Probably worth it.



Definitely not set for life with $2mil. That only equals out to about $50,000/year.

Well if you took $2 million FRN's and bought gold and silver with a portion of it, you would be much better off.

[onlyrp]

Well if you took $2 million FRN's and bought gold and silver with a portion of it, you would be much better off.

Not even, you'd be debt free, have a few houses, a few cars that you'll never worry about repairing. Unless of course you're currently in $2M debt.

[CaptUSA]

That's the best part about the lottery. I think that's why most people play - paying a couple dollars for a sweet daydream. Probably worth it.

Definitely not worth it! I believe this type of daydream is harmful to the human psyche. It directs focus away from real, attainable goals. It nourishes the notion that there is an easy way out. Sure, you can't win if you don't play, but you also can't fly if you don't flap your arms.

I've seen people that actually convince themselves that they might win. Then, when they don't, they go through a regretful, almost mournful period only to start it again when the pot grows big again. Now, not everyone gets thsi carried away, but even in small increments, I think this daydream is damaging.

With all the said, I did get into a pool at work - but I have no illusions that we are going to win. I do it more as a social thing more than anything else. And if, by some miracle they did win, I wouldn't want to be the only one left! lol.

[brandon]

Definitely not worth it! I believe this type of daydream is harmful to the human psyche. It directs focus away from real, attainable goals. It nourishes the notion that there is an easy way out. Sure, you can't win if you don't play, but you also can't fly if you don't flap your arms.

I've seen people that actually convince themselves that they might win. Then, when they don't, they go through a regretful, almost mournful period only to start it again when the pot grows big again. Now, not everyone gets thsi carried away, but even in small increments, I think this daydream is damaging.

With all the said, I did get into a pool at work - but I have no illusions that we are going to win. I do it more as a social thing more than anything else. And if, by some miracle they did win, I wouldn't want to be the only one left! lol.

I hear ya. Everything in moderation I guess. Sometimes I get a bit carried away with the daydream. I just spent the last 15 minutes looking up million dollar homes in my area I'm in an office pool too.

[onlyrp]

That's the best part about the lottery. I think that's why most people play - paying a couple dollars for a sweet daydream. Probably worth it.

Definitely not set for life with $2mil. That only equals out to about $50,000/year.

That's your problem, not mine. I'm more than set for life on $2M, and I'm not Amish. "Only" $50,000 a year for doing nothing? I feel sorry for anybody who can't do it.

[Anti Federalist]

To people like your wife, is winning 2 million much different than, 20 million, 200 million?
In all cases, you'll be debt free, set for life, and you'll die the same year.

Christ, and I thought I gave off negative waves.

I'm Norman Vincent Peale compared to you.

LoL