Across the country, people play lottery games to try to win billions of dollars each year. It’s a big business, and some states make huge profits from it. It’s important to remember that the odds of winning are incredibly low, and it’s important not to spend all your money on lottery tickets.
The first state lottery began in New Hampshire in 1964, with officials hoping to find a way to fund things like education and veteran’s healthcare without raising taxes too much on the working class. This was a time when government services were expanding, but the social safety net had not kept pace with rising costs.
Lottery revenue has grown since, but it’s not a large percentage of overall state revenue. Instead, it primarily comes from a relatively small slice of the population: those in the 21st through 60th percentile of income distribution. This group tends to be lower-income, less educated and nonwhite. It’s a demographic that can afford to buy a ticket, but doesn’t have a lot of discretionary money left over after paying their rent and utilities.
Most states have a system for dispersing lottery revenues. Some use them for prizes, but most put a good chunk of the money into their general fund to pay for things like education and other state services. In some cases, the proceeds are also invested in local projects or even used to help pay down a debt.
While some numbers are more popular than others, there is no strategy that will improve your odds of winning. The chances of your number being drawn in any given drawing are random, and past results do not influence future draws. It’s also a bad idea to choose numbers that begin or end with the same digit, or numbers that appear in the same cluster of numbers. This will only reduce your chances of winning by a factor of about 1 percent.
A financial advisor can help you decide whether to take your prize in a lump sum or in annuity payments over multiple years. You may want to consider your debt, your tax liabilities and your long-term goals before making a decision.
If you’re thinking about playing the lottery, it’s important to understand the odds and how much you could potentially lose. But it’s also important to remember that you shouldn’t ignore the possibility of other ways to boost your finances. It’s not impossible to find a better way to invest your money than purchasing lottery tickets, especially with the help of a trusted advisor. Khristopher J. Brooks is a reporter for CBS MoneyWatch. He has previously worked for the Omaha World-Herald, Newsday and the Florida Times-Union. His reporting focuses on the U.S. housing market, the business of sports and bankruptcy. He’s based in Washington, D.C. Follow him on Twitter @kbrookscbs. Copyright