You might think that you know all there is to know about lotteries: They sometimes have massive jackpots, some people actually do win these jackpots, and the odds that you'll ever win one are slim to none.
But there are some things that many people don't know regarding lotteries, though.
1. Odds are...
Let's start with those odds. You might know that it's extremely unlikely that you'll win a jackpot, but I doubt you realize just how unlikely it is: The odds of winning the Powerball grand prize, for example, are 1 in 175,223,510. To appreciate how unlikely it is for anyone to win that, consider that the entire U.S. population is about 320 million people -- nearly two times 175 million. So the Powerball grand prize is almost like picking two random people from the entire U.S. population and declaring them the winners.
With the popular Powerball lottery, the odds of winning just $100 are 1 in 12,245, or 1 in 19,088. That's still unlikely in the extreme.
Another popular lottery is the Mega Millions. The grand prize there offers even more remote prospects of victory, with odds of 1 in 258,890,850.
2. Another way to lose
Even more unbelievable than those odds is the fact that every year, hundreds of millions of dollars' worth of winning lottery tickets go unclaimed. A CNN report in January suggested that $2 billion worth of winning tickets went unclaimed in 2013, including more than 300 that were worth more than $1 million each. Gaming officials reportedly note that about 2% of total prize money is never awarded.
While the first surprising data I offered should persuade you not to bother playing the lottery for any purpose other than occasional entertainment for a dollar or two, this last lesson is that if you do play, be sure to follow up and see whether you won anything. You may not win the grand prize, but even $50 or $100 is worth checking in.
3. A poor road to wealth
Finally, there's some truly discouraging information about the lottery: Data shows that those who play lotteries most heavily are those who can least afford to waste any money: the poor. That heavy lottery use might reflect some lack of understanding of the odds -- lotteries, after all, have been called a tax on those who are bad at math -- but it's also simply a sign of desperation. For those who see no other way out of financial trouble or poverty, any chance at all can sometimes seem like a chance worth taking.
Here are some sobering statistics:
- According to a 2009 survey, out-of-work Texans were more likely to buy Texas instant tickets than employed Texans were.
- A survey in Connecticut found the highest rate of lottery-ticket purchasing in its poorest cities -- New Haven, Hartford, and Bridgeport.
- A 1994 Indiana University study found that ticket sales tend to rise along with unemployment rates.
The lead researcher in a 2008 Carnegie Mellon study noted, "The hope of getting out of poverty encourages people to continue to buy tickets, even though their chances of stumbling upon a life-changing windfall are nearly impossibly slim and buying lottery tickets in fact exacerbates the very poverty that purchasers are hoping to escape." That last point is a critical one, and it applies not only to the poor, but to all of us. If anyone is spending any serious sum on lotteries -- hundreds or even thousands of dollars -- they're likely to be setting their finances back significantly. After all, such sums may have been invested in ways that could actually increase their wealth.
The sad truth is pretty much spelled out in a 2006 survey commissioned by the Consumer Federation of America and the Financial Planning Association. It found that 21% of Americans think the most practical way for them to accumulate several hundred thousand dollars is to win the lottery. Worse, the least affluent and those over 55 were even more likely to agree with that -- 38% and 31%, respectively. Those without high school degrees were also much more likely (30%) to agree that lotteries are a path to wealth than were college graduates (8%).
With all this information, go forth and decide for yourself whether to play the lottery -- but know that you are really unlikely to win any big money, you may never find out if you do win, and there are much safer and more effective ways of attaining wealth.
Longtime Fool specialist Selena Maranjian, whom you can follow on Twitter, has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.