Pennsylvania Proves the Lottery Is an Idiot Tax, and Wants Even More
From time to time, 24/7 Wall St. covers the upcoming large lottery announcements and events. It is fun for most people to imagine what they would do if they won the jackpot, but the reality is that there is really only one lottery winner at the end of it all. The winner as an aggregate is not the lotto player, not by a long shot. The real winner here is the state operating the lottery, in this case Pennsylvania.
A recent announcement indicated that the Pennsylvania Lottery has closed out its 2013-14 fiscal year. It turns out that the PA Lottery generated a whopping $3.8 billion in sales. Of that entire amount, the state netted over $1 billion to benefit older Pennsylvanians — and the state wants more legislative action that would allow the PA Lottery to continue growing funds for seniors.
The 2013-14 fiscal year sales were up by 2.7% from the prior year, which comes to an additional $99.9 million. The prior year was a sales record of $3.7 billion. The PA Lottery said that net revenue rose by 1.3%, or by $14.1 million, over the previous year and prior record.
What should stand out to those who understand good risk versus bad risk is not just that the lottery winnings were up $77.7 million from the prior year. It should also not just be that only 76 PA Lottery players won prizes of $1 million or more last year. What needs to be considered is that only $2.4 billion of that $3.8 billion in revenue was paid out as prizes. On top of bad odds to begin with, the winnings are low on a total comparison in the aggregate.
The PA Lottery said that more than 62 cents of every lottery sales dollar was returned to players in the form of prizes. Translation: lottery winners are still very few and far between, and they can see exactly how much of their gambling goes back to the state and its targeted beneficiaries.
The more than 9,100 retailers that sell lotto tickets earned a combined $202.4 million in the 2013-14 year. This was an increase of $6.3 million over the previous year.