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The Scam No One Sees

The Rise of Lotteries: A Look into the Popularity and Targeting of Games of Chance

  • Lotteries have been around for thousands of years
  • They are typically run by governments and can be used to fund projects
  • In 2021 Americans spent over 100 billion on lotteries
  • The Mega Millions lottery is a multi-state lottery which has higher jackpots that attract more people
  • Lotteries are often targeted at certain people, such as those who are less financially secure.

Millions of Americans Betting Big on Mega Millions and Powerball

  • Gambling is a popular activity in the US where people buy tickets for potential big rewards despite low risk. Mega Millions, for example, involves selecting 6 numbers between 1-70 and 1 number between 1-25
  • This is done twice a week and millions of Americans buy tickets with hopes of changing their lives. The government runs lotteries due to natural human interest, but it raises the question of where the money goes
  • Looking at Powerball as an example, half of the total jackpot is used to fund the jackpot itself.

Illegal Lotteries Now Legal in US- Profits to Fund Schools, Good Causes, and More

  • Lotteries were illegal in the US for a long time
  • New Hampshire passed a law to allow a sweepstakes to help fund schools
  • 6% of revenue goes to businesses who sell tickets, 9% goes to expenses associated with running the lottery, 35% of revenue goes towards good causes such as funding public education, parks and wildlife, and organizations that help people addicted to gambling
  • The advertised jackpot is larger than the actual value due to potential investment with the slow payout option
  • When winning the jackpot, 26 million from cash option or 43 million from slow payout option is received after taxes.

The Unequal Impact of the Lottery: Who Pays and Who Benefits?

  • The lottery is a form of taxation, primarily generated from poorer and less educated people
  • This revenue does not always benefit those who paid the taxes
  • It is an industry where private companies benefit, with lobbyists keeping the lottery alive
  • Taxes collected from the lottery are progressive, tending to hit those who can least afford it
  • Studies have shown that low-income consumers have been spending more on lottery tickets than higher-income consumers.

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- The next 15 minutes couldchange your life forever.- $1.34 billion ticket.- Every year, tens ofmillions of Americansspend their money onthese, lottery tickets.I always imagine them as likethese cool colorful thingsbut this is just like areceipt with a barcode.These things are usually at agas station or a grocery storeand typically you get it fromlike a guy behind a counteror from one of these cool flashy machines.They cost anywhere from a fewcents to like a hundred bucks.And as more and more people buy tickets,all of that money goes intoone big pot, the jackpotand it grows and it growsand sometimes can rackup to like $2 billion- That much money.- Yesiree.- Third Mega Millions trollingto break a billion dollars.- 1.3 billion, 1.9 billion, 2.04 billion.- And even though everyonebuying tickets presumablywants to win the jackpotat the end of the dayafter all the ping pongballs and the numbersand the weird game show looking thing,only one person actually does- 1.9 billion.- I can't believe it.- And it can be yours for just two bucks.- Meanwhile, everyone elseis left just a little poorer.- Phoebe, you don't have anyof the first five numbers.- This is the lottery.It is a government sponsored gambling gamethat is surprisingly human.Like we've been doing thisfor thousands of yearsand we will probably continueto do it for thousands moreand not just like in the UnitedStates, all over the world.And it's almost always the governmentwho's running the lottery.Okay, so like a littleharmless fun that helpsthe government make a little extra money.It's not a big deal, right?No, these are not small numbers.This is not a little anything.In 2021, Americans spentover 100 billion on lotteries100 billion, that's with a B.These are giant numbers.This is something we should look into.Okay, so let's dive into this.Why do we do lotteriesand why is the governmentrunning these things and whatdo they use the money for?And I guess most importantlyis this even ethical- 1.35 billion- Chance to win one million dollars.- What would you do with a lot of money?- Hey, pause real quick.I need to thank today'ssponsor who is Better Help?Thank you Better Help forsponsoring today's video.I'm a big believer in therapy.I've been in therapy for several years nowand it has reshaped mylife in very real ways.And what Better Help isis a platform that makestherapy accessible to people.It's kind of hard to find a therapistlike in the traditionalway where you're sort oflike calling around and seeinglike who's in network and stuff.with Better Help youliterally just sign up,you take a quick quizand it matches you with atherapist in their giant networkof like tens of thousands of therapists.It's not bound by your physical location.So like you can get accessto a therapist that worksfor you that fits your specific needs.You can talk to them,you can chat with themyou can video call withthem, however you want.Better Help uses technologyto make the therapyprocess much easier andit's quite affordable.There's no insurance involved.There's financial aidfor those who need it.And perhaps most notably,you can change therapistsat any point for no cost.There's a link in my description.It's that link helpssupport this channelbut it also gets you10% off your first monthof Better Help so you can try it outand see if it helps you.We are in an era of destigmatizing therapyas like something thatwe actually all need.And I'm grateful that BetterHelp is making it moreaccessible to people.So link for that dealis in the description.Thank you Better Help forsponsoring this video.Let's get back to the lottery- Record shattering $1.34 billion ticket.- I can feel the winning ticket.- I'm fairly certain thisis the winning ticket.- Humans are big on gambling.We've been doing thisfor thousands of years.- 14,500,000 all in- One of the first versions ofa lottery was over in China.It's rumored that theyactually used the lotteryto fund some of the Great Wall of China.Oh, and after they like chose the numbersthe results are saidto have been deliveredby carrier pigeon.The Romans, the Dutch, anda bunch of other governmentsover time and throughoutthe entire world havedone lotteries to usuallyfund big projects thatthe government wanted to do.In England they also loved lotteriesand the settlers who wanted tocome here to the new world used lotteriesto help fund their trip.Eventually the monarch ofEngland was like, whoa, guyswait a second.Don't use your extramoney to fund lotteriesthat make you leave us.Use your money over here.Taxes were kind of asensitive topic for England.But anyway, the colonistswere like, all right, betbet, like, bet.You know, like bet like.Bet, bet.(upbeat music)I'm not in touch, I'm not in touch.So they don't do lotteriesfor like a hundred years.But then eventually theytried to do a lotteryto like fund their war toagainst England to becomelike free from England.So yeah, lotteries are not new.They've been used for a long timeand governments have alwaysrun them, blah, blah, blah.But in the past few decadeslotteries have turned intosomething much bigger and moreand more they've begun totarget a certain kind of person.Let's, let's go see ifI can win the lottery.(upbeat music)I just spent two US dollarson a lottery ticket.Let's see what happens.The jackpot for thisone is 20 million bucks.Seems like a pretty good deal.There's this one lotterycalled the Mega Millions.It's where a bunch of states put allof their lotteries togetherinto one giant lotterywhich means way more peoplewhich also means a way higher jackpotwhich then attracts more people.And then it's justlike the greatest thing inthe world for the lottery.Okay, wait, but why does the governmentrun a gambling schemethat incentivizes peopleto like spend their money on gambling?We'll get there in a second, just hold on.But for now, I just need to revelin what is happeningin my brain right now.This very human feelingof buying a $2 ticket.So low risk, I didn'thave to pay that muchbut the potential of $20million, the Mega Millionlottery is making me realizewhy gambling is so enticing.And for such a simple littlegame with Mega Millionyou choose six numbers.The first one having tobe between one and 70and the last one havingto be between one and 25.No idea how they calculatedthose rules, but whatever.Okay, you choose your numbers.You can also just tellthem to choose the numbersand an algorithm will do itfor you, which is like, listenI already have an algorithmsort of running my lifemost of the time.If I'm gonna gamble, I'm gonna choosethe (bleep) numbers myself.I got a little heated there.Anyway, eventually a bunch of balls gointo this little spiny thingand they choose the numbersand if they choose mynumbers, I win $20 million.So at two bucks a ticket,we can infer that probablymillions of Americans just did this.They went out and bought aticket like this with hopesof changing their lives.Oh, and this isn't just likeonce a year or something.This is twice a week.They'll hopefully be drawingmy numbers tomorrow nightand I will be watching.Anyway, let's get back to the explanation.- I got a specialfeeling tonight Mary Anne- Oh, for me?- No, no no I think I hadnumbers might come up.- So here in the US you'vegot a bunch of these big megamulti-state lotteries andthey're all run actuallyby the same non-profit organization.But then you also have these,you've got these little justinstant winners likelike I could scratch this off right nowand see if I win.10 chances to win.We have to do this right now.Where's a penny?No, seriously, we gotta,we've got to do this.Up to 5,000 bucks.Wait a minute, this has to be a joke.What does that say?- It says $1,000, but I don't know.- There's no way.Oh (bleep) no.- You might have toget like three of them.- Yeah.- Oh, reveal a, oh, seeI don't know how to gamble.I was like, I just won a thousand dollars.19, 24. Come on oh manthe rush is so real.Womp womp.That's so sad.I was so ready to win today.Okay, sorry, I'm getting outof my like intoxicated buzzof gambling, which clearlyI haven't done enough.I grew up Mormon okay, give me a break.You scratch off this latexyou see if you won, you don't win.I didn't win.It's actually really satisfying,but it's kind of messy.You also have smallerlotteries that are usuallymore frequent, butthey're smaller jackpotsbut you have better odds.Anyway the point is thereare all sorts of lotteries.Speaking of odds, what are my oddsof winning the big jackpot?According to one statisticianwho crunched all the numbersmy odds for winning on this ticket islike one in 302 million,which like, let's be honestno one really knows what that means.I don't know what that means.Like what is that 302 million?That's a bigger number thanthan my brain can fathom.So let's do a visualization.Imagine you have 66 bathtubs.I mean, I'm not sure whyyou need 66 bathtubs.It seems a little bit excessive,but who am I to judge?And yes, I know a lot ofyou noticed I cut my hair.That's because I couldn't handlenot shampooing my long hair.Okay, let's just get it out of the way.I know everyone's been thinking it.Anyway, you've got these66 bathtubs and eachof them is filled to the brim with rice.4.5 million grains of rice in fact.How did we calculate that number?Go to the sources.We actually did an analysisto see how many grainsof rice would fit into these bathtubs.4.5 million.So you've got 66 bathtubsand they're all full of riceand one of those grainsof rice is painted gold.Now close your eyes,walk through the fieldand thrust your hand into oneof these 66 bathtubs and pickout a grain of rice and maybeyou found the golden grain.But yeah, those are my oddsof winning tomorrow night.Not as fun to think of it like that.And this works even if you buy a tonof tickets or use the samenumbers over and over again.None of this reallydoes anything meaningfulto change your odds.Mr. Beast did thisgreat video a while backwhere he bought a million dollars worthof scratch off ticketsand lost about 300,000.Okay, so we're done withthis part of the video.The lottery exists, it'sbig, you'll probably lose.We all know that.My bigger question hereis why does the governmenthave a monopoly on this gambling game?- Got a lottery ticket have you?- I just so happened to have one.- No, you can't do that.You have to leave it with meand I'll look after it for you.You can come visit us anytime you want to.- Some economists arguedthat gambling is this naturalthing that humans love to do.So if they're gonna do itanyway, why not use thatas a game to generaterevenue for the government?But to me that begs the question of likewhat do they actually use the money for?Luckily there's data forthat and for an examplelet's use this giant lotterycalled the Powerball.And let's make the numbers easy here.Let's just say thateveryone has bought ticketsand the big pot hastotaled up to $100 million.Which is like, you know actuallyin the ballpark ofsomething that could happen.Half of that money goesto fund the jackpot.So let's just say that $40 million isfor the jackpot and theremaining 10 million goesto all the smaller prizes.Okay, but under the hood,something else is going on.If you look at all thebillboards for the Powerballat this moment, it willactually advertise itas $67 million for a reasonthat I will explain in a second.But the point is that only 50%of all the money generated goesto the people who bought the tickets.So the question is, wheredoes that other 50 million go?Well, 6% of that a hundred million goesto all of the gas stationsand convenience storesand like other businesseswho sell the tickets,they get in on some of this.9% of the a hundred million dollars,so like 9 million bucksgoes to pay all the peopleand expenses associated withlike running the lotterylike all the advertising andlike the employees and stuff.These are private companies that contractwith the government to runand advertise the lottery.That leaves us with $35 millionof our original a 100 millionwhich according toPowerball's website, goes toquote good causessupported by the lotteries.Womp womp.What does that mean?What are good causes?The Powerball website won't tell you muchbut we did research into thisand we found that from state to statethe definition of good causes changes.In a lot of states thismoney goes to quote educationlike in Virginia in 2022where the lottery money wasused to fund almost $780 millionof the public education budget.This is good, leveraging humans obsessionwith gambling to like fundthe education of our children.I'm super into it.Oh, until you realize thatyes, they give all this moneyto the education, but thenthey reduce the existing budgetso that it ends up basicallybeing the same numberwhich means the lotterydoesn't actually giveany extra money to the educationsystem, that is so stupid.Oh, and the money isn't even distributedin an equitable way.The funding a lot of timegoes towards scholarships, collegesand ends up benefiting wealthier schools.So yeah, that's whatthey mean by educationkind of deceptive, not cool.But then there's otherplaces where the lottery paysfor things that we takefor granted that probablynever would cross your mind.Like in Colorado where thestate spent $14 millionon their parks and wildlifein 2019 using profits from the lottery.Or in Nebraska where theyused the money to fundlike their state fair,like who would've guest, ohand this is a good one inMinnesota, they've spentover $51 million of lotteryprofits to fund organizationsthat help people who areaddicted to gambling.Like what?Like we're using thelottery money to help peoplenot gamble.I don't know that meansit's just that one'sa weird one to me.Okay, so governmentsuse lottery money to dogovernment things, buildinfrastructure fund public programsand stuff like that, cool.Okay, wait, but why doesthe government have tocollect money in this weird way?We'll get to that I promise, but in a sec.I know everyone's wonderingabout what happens to the winner.- He's gonna have over $114 million.Wow, how does that sound?- These lucky ducks who just walkedinto tens of millions of dollarslike how much am I gonnaget tomorrow night whenmy numbers are picked?It's just sort of manifestingyou know in our little scenario, rememberthat they had advertised$67 million and thatreally it was $40 million thatwas allocated to the winner.How does that all work out?That is because when you win the jackpotyou can get it in two different ways.You can get it all at onceor you can get it slowlyover the course of 29 years.If you get the cash all at oncethen the government immediately takesout 24% of federal taxes and thenof course the state will get their taxes.So like here in DC it'slike 9.75% that's taken off.So even though you wereadvertised 67 millionthe actual jackpot was the 40 million.So really you walk awaywith about 26 million bucks.The reason it was advertisedas 67 million is becauseof the other option.If you take it slowly overthe course of 29 yearsthen the government holds onto that moneyand invests it in likebonds and it gains interest.And they project thatover that time it willactually be a total payoutof $67 million.That also gets taxed abunch of ways and whatever.And eventually you end upwith about 43 millionif you do the over time.So 26 million versus$43 million depending onif you take it all atonce or take it over time.The point is that onceagain, even with the winnerthe government makes a lotof money off of lotteriesand this is the number thatshould blow all of our minds.The US federal and local lottery revenuein 2020 was around $27 billion.$27 billion in governmentrevenue because of the lottery.And this is kind of whereit feels a little messed upbecause I thought we already had a wayof funding the government.Isn't that just called taxes?- Look we got the Powerballnumber, we won $3.- Wow, you think we should get thatover 20 years ago for the big payout.- Hello America, I'm Tom Crow,it is Tuesday, January 17thfor tonight's $20 millionto win the jackpot youmust match these fiveplus that gold mega ball.Now let's see if I can makeyou a millionaire tonight.- Nah, I already lost this, (bleep) this.Back to the video.So now we can answer this question.Why does the governmentrun a gambling scheme?And it boils down to this,lotteries were illegalin the United States for a very long time.Public opinion was very against them.But then in the sixties,New Hampshire needed money.At the time they didn't havea sales tax or an income tax.They were running low on taxrevenue to fund their schools.So they passed a law that allowed themto start a sweepstakes to raise fundsfor their schools and it kind of worked.They made money.I mean presumably, right?Like and then other stateswere like, wait a minutewe can make taxes into a fun gameand no one will get mad at us?And the answer is, yes you can.It's called the lottery.And so a bunchof other states started toadopt it and now we're headedinto an era that is characterizedby lower and lower taxes.- By lowering everyone'stax rates all the wayup the income scale, eachof us will have a greaterincentive to climb higher toexcel to help America grow.- Taxes have never beenpopular, but this wasa time when taxes reallystarted to hit a new low.So after years of being illegalthe lottery is back and itis back with a vengeance.Soon you have thesemulti-state national lotteriesand the government starts tomake millions and then billionsof dollars of tax revenue,revenue that they weren't gettingfrom just boring old taxes.Okay, so the lottery is just another taxbut who ends up payingthese fun voluntary taxes?The people who pay them are the ones whodon't really have the means to.Poorer and less educated peopleare the ones who play the lottery most.- The lottery is mostly a taxon people who don't know math.- The lottery ends up as a taxon those who can least afford it.- It's a tax on the poor- But most of that money isspent by low income consumer.- In South Carolina, one report foundthat people who make lessthan $35,000 a year spent morethan double on lottery ticketsthan people who make over $100,000 a year.Let that sink in for a second, double.They also found thatpeople of color are morelikely to buy lotterytickets than white players.One study found that in almost every statewhether it's by designor not, neighborhoodsthat have lottery retailershave a higher poverty ratethan neighborhoods thatdon't have lottery retailers.Remember, this is the free market.These retailers are following the demand.So yeah, you start to see a pictureof the government using the desperationof those who are lesseducated to generate revenuethat they don't get fromboring old regular taxes.And then I think the momentthat actually gets me hereis that that moneythat revenue goes to fund thingsthat isn't often beneficialto the poorer communitiesthat bought the ticketsand paid the taxes.So yeah, that is the lottery.The question is why do we keep doing this?And again, it goes backto that very shrewd economic argument.Humans love gambling,they're gonna do it anyway.Why not just regulate itand make some extra revenue out of it?But as always, there's someprivate interests here tookeeping this all alive.Who prints all of these, right?Who makes the latex that goeson the little scratch off?Those are companies that makea lot of money off the lotteryand they actually have lobbyistskeeping the lottery alive.So yeah, the lottery existsand will probably always exist.I mean, humans love gamblingand taxes exist and are necessary.We need to fund ourgovernment, but do we needto run a gambling schemeto raise those taxes?The specific way that the government runsthe lottery today is aregressive tax on the poor.It raises money and itsends that money to placesthat doesn't benefit the peoplewho are funding that tax.And so when we see thatgambling funds educationor goes to good causes, to methat just feels misleading.We just need to call it what it is.The lottery is a tax on the poor.(slow music)All right, another video isin the hopper, the lottery.What is hopper not cool?- Thanks for watchingeveryone, wanna tell youabout a few things that I need to tell youabout at the end of the videothat you may be interested in.Number one, it's no longer just me.I mean it hasn't been for like yearsbut like we now have a largeteam of people who contributeto making these videos andwe have a behind the scenesvlog that we publish once amonth over at the newsroom.The newsroom is just thefancy way of saying Patreonbut newsroom just sounds way cooler.So we call it the newsroom.Every month we publish abehind the scenes vlog.We have my scripts are over there.You can read the scriptsand see what those look likeif you're interested, you geta royalty free Tom Fox songand you get the warm fuzzy feelingof supporting this channeland the journalism thatwe're trying to do.The link is in my description.You can go 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