It’s a world-record jackpot of more than a half billion dollars that has Americans lining up Friday for a chance to win.
But the odds of winning the Mega Millions lottery are so slim – 1 in 176 million – that amateur statisticians have already calculated odds that suggest ticketholders are far more likely to be struck by lightning – or murdered – than they are to win the estimated $540 million grand prize.
The only sure winners are the 42 states and the District of Columbia, which sponsor the lottery. Indeed, the huge jackpot is drawing so many extra ticket purchases that the jackpot quite possible could grow beyond $540 million. That will mean even more money for the states.
Much of that extra buying is expected to happen today as the evening’s drawing nears. In Massachusetts, for example, local lottery officials predict outlets could sell as much as $10 million in tickets in a single day. Massachusetts represents about 2.5 per cent of the lottery’s national revenues. If that forecast holds true nationally, then Mega Millions would raise as much as $400 million Friday.
That amount – added to the hundreds of millions from the 18 previous drawings where there was no winner – could push the final amount much higher than the current estimated jackpot.
But the chances of winning remain just as slim, since lotteries have the worst odds of just about any legalized form of gambling.
“Most lotteries return about 50 to 60 per cent of all money bet to players as jackpots,” David Schwartz, director of the centre for Gaming Research at the University of Nevada Las Vegas, writes in an e-mail. By contrast, “Nevada casinos, in 2011, returned 92.28 per cent.”
Even among lotteries, the Mega Millions drawing is at the lower end of the spectrum. Winners get about half the jackpot (whatever cash is accumulated), 15 per cent goes for operations and the retailers that sell the tickets, and 35 per cent goes to the states.
States often recoup even more money through taxes levied on winnings. The federal tax rate on gambling winnings is 25 per cent. Massachusetts levies an additional 5 per cent state tax.
Often, states allocate that money for schools. Others use it for local aid. When the lottery revenues are allocated for such large budget areas, their overall impact is small. “Sometimes, voters assume the problem of the funding of the education is solved” with a lottery, Mr. Cook says. “But that does not begin to be enough to make a great deal of difference.”
In Illinois, for example, lottery money accounted for only 8 per cent of state funding for public schools in fiscal year 2009, according to the Illinois Association of School Boards.
Sometimes, states target lottery money more narrowly so it has a relatively bigger impact.Georgia, for example, uses the money to fund scholarships for students who attend a college or university in the state. “That is a program that would not exist without a lottery,” Cook says.
If the odds are so bad, why do people play? Typically, the poor and less-educated are the ones who play the scratch games and other games of chance. But big and highly visible lotteries, such as Mega Millions, draw people from across all socio-economic groups, Cook says. Some of the allure is to be part of a national event. “Part of it is just our tendency to be optimistic and to dream,” he adds.