Powerball To Dump Illinois Over "Lack Of Budget"

Tyler Durden's picture

As if Illinois didn't have enough to worry about between an imminent downgrade to junk (as soon as July 1), soaring debt costs, insolvent pension funds, and roads that may soon resemble the lunar surface, today in the latest insult to a relentless series of injuries, the lottery itself is about to dump Illinois.

According to the Sun Times, the Multi-State Lottery Association, the organization that runs the Powerball lottery and Mega Millions games, will drop Illinois at the end of June without a budget agreement. Since Illinois has been unable to compromise on a budget for the past two years, and not even the threat of being the first US state in history of being "junked" has prompted a compromise, it most likely means that Illinois resident have just two more weeks of "get rich quick" opportunities, before they are cut off from the rest of America.

Speaking on Thursday, Illinois Lottery spokesman Jason Schaumburg confirmed that the games will be dropped without a state budget. He said the association has had discussions since 2015 about dropping Illinois, but this is the first time the group has taken action. He called it “another example of why the General Assembly needs to deliver a balanced budget to the governor." Alas, if the recent surge in Illinois GO debt yields...

.... or the threat of a default in the face of almost $15 billion in unpaid bills has failed to convinced the General Assembly, we doubt this will.

Its unfortunate. Powerball was the only thing that I would buy, because I knew that it would pay out,” said Anthony Martinez, who lives in the Logan Square neighborhood. “With the Illinois budget crisis, it’s not a guarantee that Illinois’ going to actually pay out on your lottery winnings.”

According to the Sun Times, the state reported $99.4 million in Mega Millions sales and $208 million in Powerball sales within the 2016 budget year. It’s unclear how much revenue the state got from the sale of those tickets.

The Multi-State Lottery Association is a non-profit, government-benefit association owned and operated by its 36 member lotteries. All profits are retained by the state lottery and are used to fund projects approved by the state legislatures, according to the association. The Illinois Lottery isn’t part of the association.

Powerball is offered in 44 states, the District of Columbia, Puerto Rico and the U.S. Virgin Islands. Mega Millions is offered in 44 states, along with the District of Columbia and the U.S. Virgin Islands.

Then again, removing the temptation of some of the high-profile lottery games is “not necessarily a terrible thing." Woodlawn resident Shaneen Murray said many people waste money on the lottery that they probably could be spending on other things.

“Maybe people can save money, or put their money toward something better,” she said. And, as we explained previously, she is absolutely correct.

As we explained in January 2016, the Powerball and various other state lotteries are nothing but a tax, if entirely voluntary, on America's poor.

The full explanation is below:

Why The Powerball Jackpot Is Nothing But Another Tax On America's Poor

What Seems To Be Is Always Better than Nothing

Summary: American adults spent an average of $251 on lottery tickets.  With a return of 53 cents on the dollar, this means the average person threw away $118 on unsuccessful lotto tickets – not a great investment.  So why are we spending so much?  Well, lotteries are a fun, cheap opportunity to daydream about the possibility of becoming an overnight millionaire (or in this case billionaire), but on the flip side people tend to overestimate the odds of winning.  Lower-income demographics spend a much greater portion of their annual earnings on lottery tickets than do wealthier ones

Since lotteries are state-run, that effectively means that the less affluent pay more in taxes (albeit by choice) than broadly appreciated.  And even winning the lottery doesn’t guarantee financial success.  More than 5% of lottery winners declare bankruptcy within 5 years of taking home the jackpot.  Despite their drawbacks, though, lotteries are no doubt here for the long haul – in states that have lotteries, an average of 11% of their total revenues come from lottery ticket sales, and the number is even as high as 36% in 2 states (West Virginia and Michigan).
 
Consider the following credit-card-advertisement style sequence of statistics:

  • Lottery ticket sales in the US in 2010:  $59 billion
  • Average spending per person:  $191
  • Average spending per adult:  $251
  • Chance at hitting the jackpot:  (Apparently) priceless.

I have never bought a lottery ticket and honestly don’t even know how.  And as far as I’m aware, I don’t know anyone who spends north of 200 bucks a year playing the lotto.  The only lottery my friends play is the NYC marathon lottery, where they’re gambling for maybe a 1 in 13 chance to fork over $255 for the privilege of slugging out 26 miles through the city’s streets.  Not quite hitting the jackpot in most people’s minds. 
 
But someone, somewhere is buying all those tickets.  In Massachusetts, where the lottery is more popular than in any other state, people spend an average of $634 a year on Mega Millions, Powerball and the like.  Delaware comes in at number 2 with $504 spent per person, while Rhode Island ($469), West Virginia ($388) and New York ($357) round out the top 5.  North Dakota brings up the rear with per capita lottery spending of $34.  You can see the full list in the table following the text. 
 
It’s difficult to pinpoint exactly who is investing so much money in a product that provides poor returns, but numerous studies show that lower-income people spend a much greater proportion of their earnings on lotteries than do wealthier people.  One figure suggests that households making less than $13,000 a year spend a full 9 percent of their income on lotteries.  This of course makes no sense – poor people should be the least willing to waste their hard-earned cash on games with such terrible odds of winning. (http://www.dailyfinance.com/2010/05/31/poor-people-spend-9-of-income-on-...).
 
Why bother?  Well, one answer is obvious enough and applies to just about everyone who plays.  For a buck (now $2 for Powerball) we have a cheap opportunity to daydream what could happen if we suddenly won millions of dollars.  But lotteries return 53 cents to the dollar.  So why are poor people irrationally buying tickets when the probability of winning is so slim?  One study by a team of Carnegie Mellon University behavioral economists (Haisley, Mostafa and Loewenstein) suggests it isn’t being poor but rather feeling poor that compels people to purchase lotto tickets.
 
By influencing participants’ perceptions of their relative wealth, the researchers found that people who felt poor bought almost two times as many lottery tickets as those who were made to feel more affluent.  Here’s how they did it:

  • Participants were asked to complete a survey that included an item on annual income.  One group was asked to provide its income on a scale that began at “less than $100,000” and went up from there in increments of $100,000.  It was designed so that most respondents would be in the lowest category and therefore feel poor. 
  • The other group, made to feel subjectively wealthier, was asked to report income on a scale that began with “less than $10,000” and increased in $10,000 increments.  Therefore most participants were in a middle or upper tier.
  • All participants were paid $5 for participating in the survey and given the chance to buy up to 5 $1 scratch-off lottery tickets.  The group who felt wealthier bought 0.67 tickets on average, compared with 1.27 tickets for the group who felt poor.

Lotteries essentially target and encourage lower-income individuals into a cycle that directly prevents them from improving their financial status and leverages their desire to escape poverty.  Yes, that’s a bit harsh, and yes, people have the right to make their own decisions.  Even bad ones…  Also, many people tend to significantly overestimate the odds of winning because we tend to assess the likelihood of an event occurring based on how frequently we hear about it happening.  The technical name for this is the Availability Heuristic, which means the more we hear about big winners in the press, the less uncommon a big payday begins to seem.   
 
Not that hitting the jackpot is guaranteed to substantially improve the winner’s life.  Economists at the University of Kentucky, University of Pittsburgh and Vanderbilt University collected data from 35,000 lottery winners of up to $150,000 in Florida’s Fantasy 5 lottery from 1993 to 2002.  Their findings are as follows:

  • More than 1,900 winners declared bankruptcy within 5 years, implying that 1% of Florida lottery players (both winners and losers) go bankrupt in any given year, which is about twice the rate for the broader population.
  • “Big” lottery winners, those awarded between $50,000 and $150,000 were half as likely as smaller winners to go bankrupt within 2 years of their win, however equally likely to go bankrupt 3 to 5 years after.
  • 5.5% of lottery winners declared bankruptcy within 5 years of bringing home the jackpot.
  • The average award for the big winners was $65,000 – more than enough to pay off the $49,000 in unsecured debt of the most financially distressed winners.

Lottery players tend to have below-average incomes, so they are probably less accustomed to budgeting when they receive a windfall.  There’s also a psychological term called Mental Accounting that explains how people might treat their winnings less cautiously than money they’ve worked for.  Money has come into their possession through luck, which similar to bonus payments, often induces an urge to purchase unnecessary items.
 
But whether you think state lotteries are awful or great, there’s another word for them: essentialIn both West Virginia and Michigan, for example, lottery sales accounted for 36% of total state revenues in fiscal year 2010, and on average state with lotteries take in 11% of total revenues in the form of lotto ticket sales.  We’ve included the full list in a table following the text.  There are still 7 states that don’t have their own lottery systems, so the national average would be lower. 
 
A couple of closing thoughts on what this all means:

  • Don’t make investment decisions when you are feeling poor.  The study we cited earlier clearly shows that you are likely to buy more “lottery tickets” (think of that as a metaphor for any long shot investment) when you feel less affluent than those around you.
  • Lower income individuals likely pay more in “Taxes” than most economic commentators realize.  Assuming that the 80/20 rule applies to lottery participation, the bulk of that $59 billion in annual receipts likely comes from 20-25 million less affluent households.  That would be about $47 billion from this demographic, or roughly $2,400 per household.  Yes, I get the notion that this money is handed over in the hope of a payoff.  An ill-advised and mathematically unlikely hope, as it turns out.  But does that mean it doesn’t count as a societal contribution?
  • Maybe the U.S. needs a national lottery.  Yes, these games don’t necessarily encourage the best financial planning among the less affluent.  But there is no denying that playing the lottery is entirely voluntary.  There are probably some anti-gaming factions in government who wouldn’t like this approach, to be sure.  But there’s also no doubt that the Federal budget could use the money.  And, hey, you never know…

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Roth-a-feller's picture

No Power in those Balls.

Looney's picture

 

Why is the game still called PowerBall(s)? The politically-correct name would be PowerVagina(s).

Where are the Femi-Nazis when you need’em?  ;-)

Looney

Shitonya Serfs's picture

Seems like everyday, Illinois loses more lotto players anyway; via Chicago shootings. Win-Win 10-23-41-50-63 21PB

Joe Davola's picture

If only Illinois would have hit the $400+ million jackpot a few days ago...

Dutti's picture

We were traveling around in Nevada and spent a night in an Indian Casino in Colorado.

We noticed that the 80/20 rule is also in effect with casino gambling. One wonders how 80% of the people who are sitting on the machines can even afford it and it seems obvious they should not be there.

I guess it's just an addiction.

I also noticed that the lottery thing is even worse in latin countries - tons of ticket vendors an even more poor people.

Jim Sampson's picture

I'm surprised Arizona and California aren't higher.  Quite a few people from Vegas hit the borders.

847328_3527's picture

"Mean I not be gett'n dat $11 million penshun?!"

 

~ Lowrenta Latesha Washington, Principal, Central Shitcago H.S.

vato poco's picture

how the hell can you fuck up the lottery?!? it's like when casinos go bankrupt: you scratch your head and wonder just .. how ... ??

OTOH, democrats

His name was Seth Rich

#PizzaGate

#WhatsontheLaptops

#WhyUNoIndictWeiner

#WhyUNoIndictPodesta

#DraintheSwamp

#BuildthatWall

#TheyAllHaveToGoBack

Delving Eye's picture

Border states are going to be inundated with lottery-ticket buyers.

Drimble Wedge's picture

Blame RICH WHITEY!!!

 

http://img2-azcdn.newser.com/square-image/102971-20110331182825/rich-whi...

 

We need unotha 'community organizer' IN PRESIDENT!

Stuck on Zero's picture

I wonder if an Illinois pension has a greater chance of payoff than PowerBall?

I am more equal than others's picture

 

 

You are 65 times more likely to be hit by lightning than win the powerball.  It is a powerball alright.  They power than shaft to the balls to the people who understand and can't afford it the least. 

Slomotrainwreck's picture

“Maybe people can save money, or put their money toward something better,” she said. And, as we explained previously, she is absolutely correct.

Best reason to get rid of the only legal racket in town. Corporate takes 50% and gives it to the Government then the "Winner" gets 50% of the remainder. Ban the corporate lotteries and allow states to manage local numbers games with a reasonable payoff percentage.

In the good old days, the racketeers only kept 20%.

tmosley's picture

>Who buys these tickets

Niggers. This should be obvious to anyone who has any amount of experience with them. It is also why the current welfare system is pure waste. Niggers will always find a way to get food. They just have to get hungry first. If you give them money before they need it for something, it will be long gone by the time they do need it. Give then a few thousand dollars in cash and it will probably be the death of them.

NoDebt's picture

Oh, come on.  There are plenty of spics who buy lottery tickets, too.  You're being racist.

 

Dutti's picture

He did not exclude white niggers.

Drimble Wedge's picture

 

<---Rahm E 'skims' from the lottery pool

<--- Rahm E buys lottery tix

847328_3527's picture

It's surprising the Dems in Illinoise haven't blame the Russians yet?!

Drimble Wedge's picture

First ~ you need a SWAMP (they probably already got that)

 

But you also need Sheriff JW Pepper

 

https://www.youtube.com/watch?v=PoZtYqi78Nw

ipso_facto's picture

Can you buy Lotto with EBT cards?

Pure Evil's picture

Its all old geyzers down here in Florida.

Everytime I go in the grocery store the old folks are lined up buying tickets and scratch offs.

83_vf_1100_c's picture

The lottery was their Plan B retirement strategy.

SoDamnMad's picture

I remember riverboat gambling south of Memphis over the Mississippi line when it first started.  Dig a hole next to the river and build a casion on a barge. Then let the water in from the river so that it "was on the Mississippi". Money would do some local road improvements, buy a firetruck or two, a few kickbacks and the buses flowed in mainly with Memphis's poor. Then the county closer to memphis would approve it and do the same and the casinos farther south folded.  The casinos would cash your welfare checks, disability checks, whatever.  Bus ticket home was paid for but you had to break it to the family the money was gone as your hot streak wasn't so hot. My friend played a lot and got complimentary dinner coupons so we went to eat and watch the entertainment. I hated to make that dash from the car to the casino to avoid all those losers selling watches and whatever.

Montani Semper Liberi's picture

 I work at a sate lottery "mini casino", which has 5 slot machines, and I have been offered everything from cartons of cigarettes, collectible die-cast NASCAR models, and sexual favors (women) from people with a gambling jones.  This is why WV ranks so high on the lottery revenue scale. These lottery mini casinos, which have also been dubbed the crack cocaine of gambling, are in or near every WV community large and small.

 Thank you former governor Wise.

the piper's picture

I was living and working in Memphis when the casinos set up shop in Tunica.  My work required that I travel south on US61 and I noticed that on the stretch of road between Tunica and Clarksdale there popped up seemingly overnight, several pawn shops (that weren't there before the casinos moved in). I also noticed that prominently displayed in the front yard of said pawn shops were a large assortment of bicycles, kiddie cars, trykes, big wheels, and scooters for sale. I imagined some degenerate gambler yanking up his kid's toys and saying "Daddy's gonna need this for a little while" and driving off to the pawnbroker's to exchange the bike for a half a roll of quarters to feed the slots.  I had a work associate who lived in Tunica County and he regularly read the county's legal notices in the news of record down there and he said that the companies that owned the casinos were regularly popping up as the new owners of record of property, trailers, cars, trucks, and anything with a paper title.  I believe the law was changed shortly thereafter forbidding the casinos from taking propery as a collection of debt; from then on there had to be a middleman, I guess to shield the casinos from the appearance of predatory lending.  

Stalefarts's picture

Guess you've never heard of Etheopia. Those niggers were starving back in the 80s, always saying "we beez hungry and sheet" and some rich mostly white "rock stars" sent the niggers a ton of money, which they pissed away on bling and millitary arms to start a war with fellow savages the Somolians. Last time I checked those niggers still beez hingry an sheet.

Hal n back's picture

can snap cards be used for buying lotto tics?

Is lotto tic spending included in GDP.

Dabooda's picture

Lotteries aren't exactly "a tax on the poor."  They're a tax on the stupid

Like government bonds, they're a surefire way to lose money while "investing" in your own destruction.

My crotch itches's picture

And yet Illinios can afford to pay a "State Lottery Spokesman"?

True Blue's picture

Exactly, or possibly just a tax on people who cannot perform basic math.

How come when the mafia does it, it is called a 'numbers racket' but when the State does it....

Jerky Miester's picture

"The politically-correct name would be PowerPussy(s)."

Fixed it for ya.  Has a better PC ring to it.

JRobby's picture

More opiates of many varieties is what the oligarchy uses to keep the sheep crawling on their belly's

booboo's picture

This event more than any other event will get Joe six pack ass off the couch and into the street

Automatic Choke's picture

they left some states off the list.  what gives?

Dabooda's picture

Some states (CA is one) don't allow Powerball ticket sales.  State mafia wants all the loot it can get, and doesn't want its accounts audited by any interstate agency.

Pure Evil's picture

Alabama I believe is another state without any form of lottery.

A proud member of the Bible Belt.

Countrybunkererd's picture

It is going to be an interesting year.  Beautiful, painful maybe, but beautiful.

Ben A Drill's picture

I play one dollar every 6 months.

cheech_wizard's picture

Demonstrably false statement.

Standard Disclaimer: Powerball - $2 a ticket. 

Ben A Drill's picture

Yeah, I don't play. I'm busted.. you got me. :)

Countrybunkererd's picture

At ZH there is ALWAYS someone who knows the truth and will NEVER hesitate to point out the error.  Wonderful place!!  I played once and I am pretty sure my father in law bought my ticket... I slept a few thousand times since then.

City_Of_Champyinz's picture

Hey I play once a year...takes me 6 months to save the first buck, another 6 months to save the 2nd.  Then I start all over again!

SubjectivObject's picture

One ticket a year for the maff challenged.