Remember to Play all Lottery Games Responsibly |
Lottery Sales
Lottery Revenues
Purchasing lottery tickets
Lottery prizes
Who plays lotteries?
Lottery advertising
Lotteries and compulsive gambling
Lottery regulation
Lottery odds
How many lotteries are there?
In North America every Canadian province, 43 U.S. states, the District of Columbia, Mexico, Puerto Rico, and the U.S. Virgin Islands all offer government-operated lotteries. Elsewhere in the world publicly-operated lotteries exist in at least 100 countries on every inhabited continent. In some cases they are operated by national governments, in other cases by state or provincial governments, and in still others by cities.
What types of games do they offer?
Most offer instant or scratch-off tickets. Many offer lotto and/or numbers games. Some also offer keno or video lottery terminals. Outside of the United States many offer various types of sports betting. Raffles or passive games are less common. A few government lotteries, including those in British Columbia, Manitoba, Ontario and Quebec, also operate casinos. See the definitions section for examples of these and other lottery games.
How much do lotteries sell?
During fiscal year 2012 (which for most jurisdictions ended June 30) U.S. lottery sales totaled $78 billion ($US). Canadian sales reached $9.3 billion ($Can).
What jurisdictions sold the most?
New York led the U.S. (and North America) with fiscal 2005 sales of $6.2 billion, followed by Massachusetts with sales of $4.5 billion. The Canadian leaders were Quebec ($3.1 billion) and Ontario ($2.3 billion).
Table of North American lottery sales
Lottery Revenues <top>
What do lottery revenues benefit?
Lottery proceeds benefit different programs in different jurisdictions. In many cases lottery profits are combined with tax and other revenues in a government's general fund. In other cases lottery proceeds are dedicated to a wide range of causes, including education, economic development, the environment, programs for senior citizens, health care, sports facilities, capital construction projects, cultural activities, tax relief, and others. Lottery beneficiaries.
Who decides where the money goes?
In a few cases the recipients of lottery proceeds are specified in a jurisdiction's constitution, but in most cases this decision is up to that state or province's elected officials.
But isn't it true that lotteries haven't benefited education like they were supposed to do?
First, not every jurisdiction dedicates lottery proceeds to education; in fact, less than half do. In many places where there is a dedication to education, state education spending has risen but other parts of the budget have risen faster. Education is therefore a smaller proportion of the budget than it was before the start of the lottery. Skyrocketing medical care costs and the demand for new prisons have placed a tremendous strain on all government budgets. Between 1986 and 1993 the average U.S. state saw a 13 percent annual increase in the cost of correctional facilities. Schools have benefited from lottery funds, but this contribution is often masked by the other demands placed on state budgets.
It is also true that some non-lottery states spend a higher percentage of their budget on education than do lottery states, but in most cases the lottery states spend more per pupil. Individuals making this arguement fail to recognize that the funding needs of all states are not equal. High-growth and more populous states, in particular, usually have greater needs in areas such as criminal justice and health care than do smaller, more rural states, and it should come as no surprise that their education percentage is smaller. The more populous states are also the states most likely to have lotteries.
How much money do lotteries raise?
Since the New Hampshire lottery was founded in 1964, lotteries have raised more than $200 billion for government programs in North America. In fiscal year 2012 Canadian lotteries transferred $2 billion ($CAN) to their beneficiaries, while U.S. lotteries turned over $19 billion ($US) to theirs.
Purchasing Lottery Tickets <top>
Where are lottery tickets sold?
Lottery tickets are sold at more than 240,000 locations throughout North America. Most of these locations are conventional retail outlets such as convenience stores, gas stations, and supermarkets.
How is it decided who gets to sell tickets?
State and provincial laws set minimum standards to sell lottery tickets based on financial soundness and integrity. Generally, any retailer meeting these standards will be permitted to sell lottery tickets.
How much do these retail outlets make?
Retailers are paid a commission on every ticket they sell. These commissions vary from jurisdiction to jurisdiction, but typically range from 5 percent to 8 percent depending on the specific product being sold. Retailers are also commonly compensated for cashing winning tickets, awarded bonuses when they sell a ticket which wins a major prize, or rewarded for exceeding sales goals. Retailers typically pay a license fee and in some cases other costs relating to the sale of lottery tickets. These costs also vary from jurisdiction to jurisdiction.
I don't live in a state with a lottery. How can I buy a ticket?
You must travel to a state or province with a lottery and buy the ticket there. Lottery tickets cannot legally be sold by mail, telephone, or in any other type of interstate commerce.
Can lottery employees play the lottery?
Usually, no, though laws do vary from place to place. In most cases the employee's immediate family and employees of lottery suppliers are also not allowed to play. In practice, there is no way that employees could alter the outcome of a game in their favor, but lottery officials generally believe that public confidence would be damaged should an employee win a large prize.
Lottery Prizes <top>
What was the biggest prize in history?
On March 30, 2012, Mega Millions made history with the largest jackpot ever: $656 million. The jackpot was split three ways, by winning tickets in Kansas, Illinois and Maryland.
What will happen if I win a big prize?
Winners of large prizes must bring the winning ticket to lottery headquarters -- the amount at which you must show up in person varies from jurisdiction to jurisdiction. The ticket will be examined by lottery security staff for authentication. The lottery usually gives some advice on seeking financial and legal advice along with some practical advice like getting an unlisted phone number. All but a very few states and provinces have laws that require the lottery to make public the name and city of every winner (to assure the public that there are real winners). The lottery will ask the winner to participate in a press conference. Most take that option. It really is a good idea to get it over with since the press is likely to pursue your story until they get some questions answered. Questions are usually along the lines of "will you quit your job?" or "what will you do with the money?" or "how did you tell your family you won?" After a few weeks the excitement usually dies down and you can go about your life.
Can winners remain anonymous?
Usually no. State and provincial lawmakers want the public to know that the lottery is honestly run and so require that at a minimum the name of the winner and their city of residence be made public. This way the public can be reassured that the prize really was paid out to a real person.
Some large lottery prizes pay out over a period of several years. What if the holder of this type of prize dies before collecting it all?
In this case the prize is considered to be part of the estate and is passed along to the winner's heirs. Contrary to popular belief, the prize does not revert to the government. The only exceptions are "win for life" games where a prize is guaranteed for the rest of the winner's life. In this case the payments stop with the winner's death.
How long do I have to claim my prize?
The time to claim a prize varies from place to place, but typically is between six months and one year.
What happens to prizes that aren't claimed?
The disposition of unclaimed prizes varies from lottery to lottery and is governed by the laws of that state or province. In some cases all unclaimed prizes reenter the prize pool and increase the payout on future games. In other cases the money goes to the government to benefit the causes the lottery supports.
Who Plays Lotteries? <top>
Who buys lottery tickets? I understand it's mostly poor people.
A recent Gallup Poll on Gambling in America found that 57% of American adults reported buying a lottery ticket in the past 12 months. People with incomes of $45,000 to $75,000 were the most likely to play -- 65 percent had played in the past year -- while those with incomes under $25,000 were the least likely to play at 53 percent. Further, people with incomes in excess of $75,000 spend roughly three times as much on lotteries each month as do those with incomes under $25,000.
In addition, surveys of gambling behavior have been conducted in a number of jurisdictions. In Colorado, for example, people with annual incomes of $15,000 or less make up 7 percent of the population but only 5 percent of those playing the lottery in the past 30 days. In Georgia, an Atlanta Journal and Constitution Survey found that only 8.6 percent of lottery players had incomes of $24,000 or less, while 27 percent had incomes between $50,000 and $74,000. In addition, 33 percent were high school graduates, 22 percent had some college, 25 percent had a college degree, and 10 percent had an advanced degree. A 1998 Texas study found that those with less than a high school education and those with the lowest incomes were least likely to play. And in Minnesota a 1998 study found that the 13 percent of the population with incomes under $20,000 made up only 9 percent of the past year's ticket buyers while those with incomes higher than $50,000 were disproportionately more likely to play.
But not all of these people play the same amount. Don't most lottery sales come from a relatively small number of people?
As with any product or service, some people are more enthusiastic consumers than others. Business schools teach marketing students the "pareto principle:" the idea that no matter what the product, 80 percent of the sales will come from 20 percent of the customers. Lotteries are no different. A Minnesota study, for example, found that 20 percent of the lottery players account for 71 percent of lottery income. In Arizona, 24 percent of lottery players accounted for 70 percent of lottery spending, and in Pennsylvania 29 percent of the players accounted for 79 percent of the spending on the lottery.
What about the heaviest lottery players? Aren't they poor, undereducated, and desperate?
Again, no. Numerous studies conducted in a wide range of jurisdictions show that frequent or "heavy" lottery players closely resemble the overall population of that state or province. They are no more likely to be poor or have little formal education than a citizen selected at random.
Don't poor people spend a higher percentage of their incomes on lottery tickets than those of greater means?
Poor people spend a larger proportion of their income than wealthy people on any item having a fixed price and general appeal. Poor people pay proportionately more for food, medicine, clothing, utilities, insurance, and housing, as well as for payroll and sales taxes. People who are well-off, on the other hand, spend a higher percentage of their income on things that the poor cannot afford, such as overseas vacations or season tickets to cultural or sporting events. The rich also invest and gamble in stock and commodity markets -- also activities the poor cannot afford.
Lottery opponents have pointed out, though, that unlike spending on, say, a movie ticket, the lottery ticket is purchased from the government and is therefore a regressive tax. But the lottery is not a tax. Webster defines a tax as "a compulsory payment ... for the support of government." No one is coerced to play the lottery. The purchase of a lottery ticket is completely voluntary - and a lot more fun than filling out Form 1040.
Ultimately, though, the important question isn't the percentage of income spent. It's whether the less affluent are spending an unduly large portion of their income on lottery tickets. This has undoubtedly happened in some instances just as it undoubtedly happened with junk food, athletic shoes, and other consumer items. However, there is no evidence suggesting that it is anything approaching the norm. The overwhelming majority of poor people, along with the overwhelming majority of upper-income people, play with restraint and moderation.
But shouldn't the government try to keep those who can least afford it from spending their money on the lottery?
This question implies that economically disadvantaged people are somehow less capable of making a decision on how to spend a dollar than those of greater means or that they are not entitled to the same opportunities for entertainment and recreation than the rest of us. The poor are allowed to vote, get married, and sign contracts. Society in the U.S. and Canada does not usurp rights and privileges based on socioeconomic status. The poor have to budget and watch their expenditures much more carefully than the rich. Economic status is not a measure of intelligence.
Lottery Advertising <top>
How much do lotteries advertise?
In 1996 North American lotteries spend $400 million ($US) on advertising and received $34 billion in sales. Advertising expenditures accounted for 1.17 percent of total revenue. By contrast, restaurant owners spent 3.2 percent of their revenues on advertising, beverage manufacturers 7.5 percent, cosmetics companies 8.8 percent, and candy makers 12.7 percent. Advertising accounts for less of the cost of a lottery ticket than virtually any other consumer product.
Lotteries and Compulsive Gambling <top>
Do lotteries contribute to compulsive gambling?
There are certainly pathological and problem gamblers who play the lottery to excess. They are, however, few and far between. According to the Iowa Department of Human Services after 10 years of the lottery's existence only 6 percent of the calls to the state's problem gambling hotline related to lottery play. A 2002 Iowa study also found that lottery games only accounted for 6 percent of the financial losses reported by those presenting for compulsive gambling treatment. In Minnesota, the lottery accounted for 4 percent of hotline calls in 1997. Also in Minnesota, of the 944 admitted to the state's gambling treatment centers from 1990 to 1996, only eight cited the lottery as their preferred game. A Colorado study found that problem gamblers were 4.7 times more likely to have visited a casino in the past week and 5.2 times more likely to have played bingo than non-problem gamblers. By contrast, they were only 1.9 times more likely to have played the lottery, the lowest figure of any form of gambling. An Iowa State University study found that having more than one marriage, frequently changing residences, being a member of a minority group, and serving in the armed forces had higher correlations with problem gambling than did playing the lottery.
Most conclusively, the recent National Survey on Gambling Behavior conducted for the National Gambling Impact Study Commission found that "it does not appear that the availability of a lottery has an impact on (problem gambling) prevalence rates." In fact, they found that problem gamblers were only slightly more likely to be lottery players than were members of the general public. By contrast, they were more than five times as likely to have made an "unlicensed" (often illegal) wager and more than four times as likely to have visited a racetrack.
What are lotteries doing about problem gambling?
Elsewhere on this web site you'll find a table of lottery contributions to problem gambling programs. These contributions vary from state to state and province to province. It is important to note, though, that decisions on what to do with lottery proceeds are not made by the lotteries but by their governors and legislatures. A state or province may choose to have a program for problem gamblers but to fund it from a source other than the lottery. The net effect, of course, is the same.
Lottery regulation <top>
Who regulates lotteries?
Lotteries are regulated by their state or provincial governments. Federal regulation in the U.S. is limited to interstate distribution of tickets and interstate advertising.
Can state governments be trusted to regulate lotteries when they benefit from the lottery proceeds?
State regulatory proceedings are much more open and accessible to the public than the workings of federal regulatory agencies. All lottery board meetings are public, as are all legislative hearings. Lottery files are public records, subject at any time to media scrutiny. Lottery opponents in a legislature can examine the smallest lottery details and vote on lottery business operations. (In what other business would those opposed to the business' existence be permitted a vote on business operations?) And if the public does not approve of the way a lottery is run, they have recourse to the ballot box and the ultimate sanction of refusing to buy tickets. Those who claim that lotteries are not regulated are really complaining that the regulators have made decisions they don't agree with.
If the states cannot be trusted to regulate lotteries because they make a relatively small amount of money on them (an average of 1/2 of 1 percent of the state budget) it follows that they should not be allowed to make their own tax policy as well.
Lottery odds <top>
Is it true that the odds of winning the lottery are worse than being struck by lightning?
No, even if we just consider the awarding of large jackpots. In 1996 1,136 people won $1,000,000 or more playing North American lotteries. An additional 4,520 won $100,000 or more. By contrast, 91 people were killed by lightning.
In addition, there's no second prize in a lightning strike. In a lottery, you win lesser amounts of money by coming close to the winning numbers. On many games odds of 1 in 5 or 1 in 4 are not uncommon. Lotteries award over $50 million in prizes in North America every day. Lightning isn't nearly that productive.
I bought six tickets for a game where the odds were one in four, and none of them were winners. Doesn't this show that the prizes aren't awarded randomly?
No. Consider tossing a coin. It is certainly possible for a coin to come up heads four, five, or more times in a row, even though the odds are one in two. Part of randomness is the concept that every ticket has the identical chance of winning and that the result of one ticket has no impact on the next. Suppose "one in four" meant that out of every four tickets there was exactly one winner. Suppose three tickets in a row lost. You now know that the next one is a winner. This is not random. If you were a store clerk and saw three people in a row buy non-winning tickets, would you sell the next one or keep it for yourself? This is why true randomness is necessary for security.