The average annual loss of lottery players
Bottom Line: It’s safe to say the Florida Lottery isn’t going to love this story. With all the recent lottery hype with super large Powerball jackpots, I figured it’d be a good time for a reality check. With odds so long of winning the Powerball or Mega Millions at around 1 in 300 million, you’re over 600 times more likely to be stuck by lightning. No kidding, according to the CDC your odds of being struck by lightning are 1 in 500,000 annually. On one hand you have a lot of people who play for fun and it’s little more than a bit of entertainment and the opportunity to dream for a few days. In reality however, for the average lottery player, it’s a meaningful financial commitment.
A LendEDU study a few years back showed the average adult laying out $220 annually on lottery tickets. Not insignificant money, but not a number which represents a meaningful percentage of one’s net income. As it turns out there was more to the story. Most people never play the lottery so comparing the revenue generated across the number of eligible adults isn’t an effective way of measuring what’s really happening. According to a study by Bankrate.com, the average lottery consumer loses $1,038 annually on tickets. What’s the opportunity cost on the annual losses by Florida’s lottery players? The average annual rate of return of the S&P 500 is 10.1% here’s the 30-year opportunity cost of playing the lottery in today’s dollars.
- Playing the lottery: -$31,140
- Investing in the S&P 500: $2,418,246
That’s not a typo. Florida is third in lottery playing behind New York and California with about $6 billion in lottery tickets purchased annually. While the Florida Lottery loves it, the reality is millions of Floridians are foregoing the long-term opportunity to turn the their money into future millions by playing the Mega Millions today. A little financial food for thought.
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