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Lottery for Losers

I live in Florida and I coexist with the state-run lottery. Lotto doesn't bother me. I don't mind that this glorified stupid tax's six-numbered ping-pong balls drain my neighbors of their hard-earned singles. The proceeds go to a good cause more often than not, and it's no skin off my taxable back.

However, the latest marketing campaign is bugging me. In two separate segments, a stand-up comedian takes jabs at folks who only play the lottery when the jackpots are huge. In other words, you're a chump if you don't buy a ticket for the measly $3 million fete. Whether it's a few million bucks or substantially more, the ad argues that it's a lot of money either way. It's a fair point until you see how flawed it really is.

One can argue that state-run lotteries have no business earmarking a chunk of their ticket sales to produce potentially persuasive TV ads, but that's not my point.

Granted, this is a single state lottery. The payouts don't peak near the levels of the huge Powerball potential winnings. Still, why are these spots making fun of people who only contribute to the Lotto prize pool when the payouts reach the tens of millions?

For starters, the campaign is disingenuous. It is trying to rile up lottery hopefuls to buy early, which in turn would create even larger possible prizes earlier when their losses roll over to the next drawing.

But who can produce this ad and not flinch at having to tag the disclaimer that the odds of winning the top prize are only one in 23 million? Let's say someone were to win that $3 million purse. That's the value of the prize distributed over the course of 30 annual installments. The cash option, if you want your money right away, means that you will only get roughly half of that as the bounty implies 30 years of earned interest on those future installments. And, yes, this is a taxable event. Sorry winner, bank on giving back nearly half of that jackpot yet again in taxes. What's left? It's still a decent six-figure check, but how smart a gamble is that when the odds are one in 23 million?

So I've got my own ad campaign in the works. It consists of thinking Floridians -- and, yes, we do have them here -- laughing at the stand-up comedians. They're holding up calculators, calendars, and ethics books. "Sit down," they would shout in unison.

My, that would be a hoot.

What if you don't win the lottery? Will you still be able to make ends meet? Do those ends justify the means to make them meet? How can you spend less than you make? All this and more in the Living Below Your Means discussion board. Only on Fool.com.

Longtime Fool contributor Rick Munarriz hasn't bought too many Florida Lotto tickets, but he has caved in here and there.


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Rick Munarriz
TMFBreakerRick

Rick has been writing for Motley Fool since 1995 where he's a Consumer and Tech Stocks Specialist. Yes, that's a long time. He's been an analyst for Motley Fool Rule Breakers and a portfolio lead analyst for Motley Fool Supernova since each newsletter service's inception. He earned his BBA and MBA from the University of Miami, and he now lives a block from his alma mater.

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