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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Pure Evil's picture

Not necessarily.

Mega Millions is still $1.

State lotteries are still $1.

Pick 5, 4 & 3 is still $1.

Some scratch offs are a $1.

cheech_wizard's picture

All true. But the article headline only mentions Powerball...

Standard Disclaimer: Saturday's winning numbers are - http://www.powerball.net/number-generator (GOOD LUCK EVERYONE!)

 

Endgame Napoleon's picture

Lotto tickets do not cost much, unlike trips to out-of-town hotels and the casino gambling financed by Aid to Families With Dependent Children and, apparently, by people on disability who, interestingly, the liberal media prefers to name, rather than EVER critiquing single mommies who spend welfare money given to them by taxpayers because sex led to reproduction on self indulgences.

Womb-based feminists cover the backs of fellow mommas--from the rigged, female-dominated workplaces that they reign over in back-watching, absenteeism gangs to the rigged welfare/taxfare system.

Not to say that people who use the disability system should play the lotto with the proceeds, but having worked at the Department of Human Setvices, I KNOW that the majority of recipients of layered forms of welfare and taxfare checks up to $6,269 are single mothers and immigrants.

http://www.harriscountytx.gov/CmpDocuments/36/Ask%20The%20Constable/Lott...

The money is supposed to go to their children. Just because sexual intercourse results in reproduction, it does NOT mean that the people who copulated and reproduced use that money for their children.

$96 million in CA welfare went to out-of-town hotels and more expensive forms of gambling than the lotto:

https://www.google.com/amp/losangeles.cbslocal.com/2013/11/19/cbs2-inves...

Here are some more adult luxuries purchased by CA's Temporary Aid to Needy Families (TANF) until banned, including tobacco and adult entertainment:

https://www.google.com/amp/www.thefiscaltimes.com/2015/04/17/30-Things-Y...

Maine and other states have seen as much as $22 million in welfare for single mommas used on lotto tickets and other things, like lingerie, tattoos and liquor. Maybe, disability recipients are using their government money for tattoos and lingerie, but no, it is mostly the young single mommas, regardless of how the FAKE liberal news spins it.

Maine mommies: you have reproduced for the motherland and are rewarded for it amply via welfare, taxfare and workplace absenteeism privileges, as your childless colleagues struggle to pay all of their bills on the low wages alone, assuming you do not bully them out the door, but tattoos and lingerie are not purchases for baby:

https://www.google.com/amp/dailysignal.com/2016/08/17/how-these-states-e...

https://www.google.com/amp/s/amp.bangordailynews.com/2015/12/16/news/sta...

In Kansas, poor, struggling welfare recipients, i.e. single moms who receive everything from free food to free housing and Child Tax Credits up to $6,269, can no longer use welfare for cruises. Nor can ABAWDS (Able Bodied Adults Without Dependents) who receive almost no help from government, regardless of their income level --- 3 months of food stamps [only] at $144/month every 3 years when I worked at DHS.

Not that ANYONE could use the $144/month to finance a cruise, especially since single, childless people get zero housing assistance and tax returns of $300 or less.

It is a LOT easier for a single momma getting $600/month in food stamps, $450/month in cash assistance, free or nearly free rent, free energy and a $6,269 Child Tax Credit to use her Aid For Families With Dependent Children on a cruise, especially since she also has the free housing, wages from a boyfriend with untraceable income, help from grandparents with grand-baby fever and a Child Tax Credit that, in of itself, would finance a cruise every year.

She also often cleans up on charity, which is also directed at moms due to the virtue-signaling power of saying you are helping children, when you are really helping moms indulge themselves as a reward for sex and reproduction.

Moms definitely have the excused time off from work in the jobs they dominate in bullying, crony-absenteeism cliques. They can easily use welfare/taxfare on cruises. As long as you are a mom, you will never (or very rarely) be fired for taking off whole mornings, whole afternoons, whole days and whole weeks, saying it is for baby.

Happy cruise, "working moms," compliments of the U.S. Treasury Department! Oh wait, it's too late....assuming these rules apply to Child Tax Credits, which are cash-assistance welfare for people who do not pay income tax, disguised as "tax credits."

https://www.google.com/amp/s/amp.cnn.com/money/2015/04/16/news/kansas-we...

cheech_wizard's picture

Oh, c'mon... I can't wait until that Social Security kicks in and I can spend all day playing the nickel slots at the local casino.

Standard Disclaimer: Paradise!

 

Automatic Choke's picture

I live in Las Vegas, but never go near the casinos (except for the occasional concert venue).  I do pass by scads of slots when I'm passing through the airport, and I see the hordes of pathetic folks with glassy eyes stuffing their burning cash into the maw of these noisy beasts.  Occasionally I stop and thank them for paying my taxes.   They never seem to get it.

Ben A Drill's picture

The lottery is a self imposed voluntary tax for the State.

meditate_vigorously's picture

The lottery is a tax on people who can't do math.

Automatic Choke's picture

"The lottery is a tax on people who can't do math."

So is religion.  Do you tithe?

atomp's picture

The lottery is a self imposed voluntary tax for the lottery.

venturen's picture

Just love watching Democrats destroy everything they touch

Agent P's picture

Me too...until they hand me the bill. 

mygameon's picture

Lol. Even state filled gamblers think Illinois is toast. I hear fiddles around a huge fire are cheap in Chicago

cheech_wizard's picture

I'm having a fire sale on Obama effigies.

Cordeezy's picture

oh no powerball leaving?  lol, the person that said they played powerball because they would pay out.......  as if they were going to win at some point.

 

 

www.escapeamazon.com

 

Yen Cross's picture

  If you want your IOU, you can have your IOU.  Trump needs to have [Ram Emanhole] thrown into the nearest Gulag.

libertysghost's picture

As much as I don't like Rham...it's the Madigan duo that needs a thorough investigating.  Father's been speak of the house for 99% of the last 40 years and his daughter is the state AG providing cover and coercion for pops.  

Secret Weapon's picture

Canary - meet Mr. Coal Mine. 

sonya55's picture

The happist time in he Getto is when the Welfare card is refilled. You can feel the excitment in the Air.

Fast food all around. They still will not give you a smoke, greedist people alive.  

Lotto tickets are a big seller, I hear a lot "I won 20 dollars", but they never take cash, only more tickets.  Most welfare cards are at zero balance  by day 7.

TalkToLind's picture

The happist time in he Getto is when the Welfare card is refilled.

A rap group even sang an ode to this:

https://www.youtube.com/watch?v=PArF9k2SbQk

Hongcha's picture

"I won 20 dollars", but they never take cash, only more tickets.

Dividend reinvestment.  That's prudent procedure in my book.

Seriously, my home province is looking dire these days.  Let's hope John Deere and CAT keep the doors open or you can stick a fork in Peoria County.

truthalwayswinsout's picture

They are just jealous of Venezuela.

They have Latin Penis Envy.

This is a recent quote from the book of Half-Breed Muslim Niggers.

Jason T's picture

We play the stock market.  ..bucket market. 

aloha_snakbar's picture

Mo money for the Dindus to buy Colt 45 with...

Hongcha's picture

...while I buy another Colt .45 ...

Frank Underwood's picture

This will be great to watch. Until fed bail out.
No way .gov letting Chi-town go under

Pure Evil's picture

Illinois is just following in the Feds path.

When was the last time D.C. passed a budget?

It's always continuing resolutions, sales of treasury's, and raising the debt limit.

Illinois should should print their own fiat, aka IOU, like Cali did some years back.

wherewasi's picture

"Illinois should should print their own fiat"

Regular Federal troops on MIchigan Ave. in ...3...2...1...

trailer park boys's picture

Win an Illinois lottery game and you're the lucky recipient of an...IOU. As in 'We'll pay you later'. And as Illinois isn't illiquid - it's insolvent - it's more like 'We'll never pay you.' Actually, the big winners are the gas stations and convenience stores across the Illinois border into Wisconsin. They're doing a bang up business with all those Illinois residents buying Wisconsin state lotto tickets. 

Hal n back's picture

NW Indiana too

is the freeze on ILL lotto payouts still in effect?

I wonder if I can buy the lotto IOUS for 10 cents on dollar, if I can take a stae income tax decuction for them ?

eg, I buy 1000 worth, thats worth 10,000  of state taxes when its written off, so I get a 37% tax break or 3700 on 1,000 of invetment

its sort of like Gores carbon credits.

 

 

NumberNone's picture

Ahhh...remember back in 2010 when the public servants of Illinois respected the contributions of their taxpayers and were focused only on delivering the best possible services for the long-term benefit of the taxpayers...me neither.  All I remember is this video and how apparent bankruptcy was around the corner...

https://www.youtube.com/watch?v=OdREEcx0-Qc 

Blankenstein's picture

yikes - what a lowbrow group and to think they are teachers......

SmittyinLA's picture

Sounds like fake news, I can't see NY turning away people that want to pay $255 to run a marathon....because too many applied, it's like selling bitcoin, how many do you want?

Leaving cash on the table in NY sounds fishy

youngman's picture

Its a welfare tax....I like it....

saldulilem's picture

No faith, no credit?

Soul Glow's picture

Deflation is killing the recovery meme - 

Kroger stock falls due to "Deflation" in food prices - 

http://www.cnbc.com/2017/06/15/kroger-sinks-13-percent-on-outlook-warnin...

PGR88's picture

Dear God - give us bankruptcy, and soon

Its the only way to control the statist, progressive parasites in government

I am Jobe's picture

In Texas, Lottery and Scratch Tickets ar for the Children they say. Also most of them stop by after Church to buy the tickets.  Yeap, TX must love the hypocrisy. 

man from glad's picture

Being a former Chicagoan, I can attest to the potholes. I mean we are talking potholes large and deep enough to snap suspension and rip the front wheel off your car. I can only imagine how bad it is going to get now they are not fixing them. 

TalkToLind's picture

Look on the bright side. Not having a budget passed means Illinois is stealing less wealth from its citizens than it otherwise would be.

TheABaum's picture

They'll still take taxes, except from the Dindus and CBOE types.

man from glad's picture

But no doubt the KleptocRats in charge have more tax hikes in store for the already financially shriveled up people. I'm so glad I bolted that place long ago.

libertysghost's picture

I can't help but wonder...did the Madigans expect HRC to win and to figure out some way of bailing out Illinois after the next GOV election WITHOUT investigating how the dad (Mike/Speaker of House who ran Illinois into the ground over the last 40 years) and daughter (Lisa/the state AG who provides him cover and threatens any critics) ruined the state (with some help of course)?  

 

Now that a "wild card" is in the WH...I have to wonder if they aren't a bit scared of the Feds.  Trump should go full distraction mode and turn his sights onto Illinois and run them through the ringer for awhile.  It would be fascinating TV.  

TheABaum's picture

Lottery: A voluntary payment to state government by the innumerate. 

mcl2177's picture

The $2's for the enjoyable day or two of daydreaming is priceless.

fishwharf's picture

My CPA told me chances of winning the lottery are about the same whether you buy a ticket or not.

Pure Evil's picture

Not true. No ticket means absolute zero chance of winning.

Since each lottery has different prize levels the chances of winning a prize vary.

For Powerball-    http://www.powerball.com/powerball/pb_prizes.asp

For MegaMillions-    http://www.megamillions.com/how-to-play

83_vf_1100_c's picture

Lighten up Francis. It was humor and funny because it possesses some truth.

bluskyes's picture

your cpa hasn't been looking at the right charts.

Chet Ricco's picture

Nothing says "trust me" like an asymptotic debt curve.