North American Association of State and Provincial Lotteries Where the Money Goes
Debunking Myths

We've all heard them - erroneous beliefs about lottery operations and games that often proliferate in mainstream media. These lottery myths can lead the uninformed, the critics and even the players to believe what is simply not true.

Over the years, NASPL has countered some of the most common myths with the underlying truths. Recently, the organization's Public Relations Committee took on the task of updating those myths to reflect recent research results and new developments in the industry. The following dozen debunked lottery myths have been prepared by lottery public relations professionals in Idaho, Iowa, Kansas, Kentucky, Maryland, Michigan, Minnesota, Tennessee and Virginia. These and other hard-working communications leaders in the industry regularly share the issues and concerns lotteries have to deal with on a daily basis.

MYTH #1:

The odds of being struck by lightning are better than the odds of winning a lottery.

While lightning may strike somewhere in the United States 25 million times a year, it does not strike citizens in the United States as often as the luck of winning a Powerball or Mega Millions jackpot does. For example, over a recent three-year period, there were 82 winning tickets that shared, or won outright, a Powerball or Mega Millions jackpot. Beyond jackpots, more than 1,300 tickets won at least $1,000,000 on either Powerball or Mega Millions from 2013 to 2015. For the three similar reporting years, the National Oceanic and Atmospheric Administration (NOAA) reports 67 lightning fatalities in the United States where these games are played. In truth, you have a better chance of striking it rich than you do of dying from a lightning strike in the United States. Of course there is one fact we do know: players have a zero chance of winning the jackpot if they never purchase a ticket.

MYTH #2:

Lottery is a form of taxation.

A tax is compulsory payment to support government. Citizens have no option in contributing to state revenue with mandated levies and other tariffs. In fact, they may go to jail if they don’t pay their taxes and fees.

Playing the lottery is entirely voluntary. Whether as a regular purchase or as an occasional play, buying a lottery ticket is an individual choice just like buying any other product. The only consequence to not playing lottery is missing some fun and possibly a prize.

Some people argue that the lottery is an implicit tax, because it has higher administrative costs and is a less efficient way of raising money, but state lottery revenues go for education and other state-supported programs just like other tax money does. The lottery is simply a form of entertainment that happens to benefit your state.

MYTH #3:

Lotteries prey on the poor and lottery purchases are made mostly by low-income people.

People from all walks of life and all income levels like to play lottery games. Across the United States, players bought more than $73 billion in tickets in 2015. Clearly, the industry didn’t achieve sales of that magnitude by focusing on low-income players. Lotteries market games to society as a whole, just like any other business selling a product in a competitive marketplace. The result is that players come from across the income spectrum. A recent Virginia study found 55 percent of those who play lottery games at least once month have incomes of $55,000 or more. A third of those who play at least once a month have incomes of $85,000 or more. In Michigan, 43 percent of players have incomes of $50,000 or more and 75 percent have incomes of $25,000 or more. A national study (by Vision Critical) found 44 percent of lottery players have incomes of $55,000 or more and 77 percent have incomes of $25,000 or more.

Some lottery critics that want to “prove” otherwise often rely on “zip code studies.” That’s when you take a certain zip code, look at total lottery sales within that area, and then assume that everyone in it has the same income and refuses to play the lottery anywhere else. Of course, the reality is people don’t always buy their lottery tickets in the neighborhoods where they live. They purchase them on their way to or from work, while shopping or running other errands, or even at the airport. Zip code studies fail to take that into account. It’s like saying that gasoline purchases are made mostly by poor people, because there are few gas stations in wealthy neighborhoods.

MYTH #4:

You get nothing for your lottery purchase if you don’t win a prize, and since there are relatively few winners, hardly anyone actually benefits from lottery.

All residents benefit financially from having a lottery in their state. Each state decides how to spend its lottery revenue and all revenue goes to such worthy causes as education, economic development, veterans, tourism, the environment, care of the elderly and much more. Without lotteries, states would have to pay for these programs with taxes. On average across the United States, for every $1 spent on traditional tottery tickets, about 27 cents goes to the beneficiaries lotteries support. A lot more than that, about 63 cents of the $1, goes back to players in the form of prizes! Not everyone wins a jackpot or a life-changing prize, of course, but millions of players win every day. Which brings us to the whole idea of why people play the lottery in the first place. Lotteries provide fun and exciting entertainment that lets players dream about what they would do if they won. In our stressful world, the ability to dream is well worth the price of a lottery ticket.

Myth #5:

The lottery makes and keeps all the money.

As much as 96 percent of funds generated from traditional U.S. lottery games goes directly back into the economy through prizes, public beneficiaries and retailer commissions. While individual jurisdictions vary, across the industry lotteries return an average of 63 percent in prizes to players, 27 percent to public beneficiaries and six percent to retailers. The remainder supports lottery operations, providing direct and indirect employment and other benefits. Lottery proceeds fund different programs according to each jurisdiction’s guidelines and are dedicated to a variety of causes, including education, the environment, health care, capital construction projects, programs for seniors, cultural activities and more. According to NASPL, U.S. lotteries generated almost $21 billion for beneficiaries in fiscal 2015 alone, including additional revenue coming from lottery-operated casino-style games in some jurisdictions.

MYTH #6:

Compulsive gambling has grown because of lotteries.

To begin with, there’s little evidence linking lotteries and problem gambling. Problem gambling help lines throughout North America report very few callers who cite lotteries as the source of their problem. A University of Minnesota study of 944 gamblers in treatment found that less than one percent cited lottery as their preferred game. The National Survey on Gambling Behavior conducted by the University of Chicago’s National Opinion Research Center concluded that “it does not appear that the availability of a lottery has an impact on (problem gambling) prevalence rates.” A study of 2,274 U.S. adolescents found that “The forms of gambling that were most associated with gambling problems were card games, casino gambling, ‘other’ gambling on routine activities, and betting on games of skill such as basketball, pool, or golf.”

Moreover, there is also little evidence that compulsive gambling from any source is growing. A 2014 study from the Research Institute on Addictions at the State University of New York at Buffalo compared national surveys taken in 1999 and 2013 and concluded that “rates of pathological and problem gambling remained stable ... This occurred even though there was a general expansion of legal gambling and liberalization of gambling laws in the US during this time.” And a study prepared for the Ontario Ministry of Health and long Term Care reviewed 202 problem gambling prevalence surveys from around the world concluded “There has been a general worldwide downward trend in both gambling and problem gambling rates beginning in the late 1990s for North America ...”

MYTH #7:

If lottery sales are allowed on the internet, retailers will lose considerable sales.

Although relatively new to the United States, online games are a staple in other countries, where they have increased public awareness and interest in lottery games as well as attracting new customers for all games. Offering games through digital channels can create new sales opportunities for retailers as well as lotteries. For example, online play “gift” cards that are available only at retailers. Or rewarding online players with free ticket coupons that must be redeemed at retailers.

Providing an online games option to players is a proven success in other countries and holds great promise in the United States to broaden the industry’s customer base by attracting new – and younger – players to all lottery games. The public increasingly is turning to the internet for personal, business and entertainment uses. Adapting to the widespread use of that technology can position lotteries and retailers for ongoing success in the future.

MYTH #8:

If lottery sales are allowed on the internet, compulsive and underage gambling will rise.

In many respects, online lottery sales provide a MORE responsible platform due to a key element that’s not available at retail-imposed limit setting. Available platforms provide daily, weekly and monthly deposit limits that address how much a player can put in their account for wagering. There’s no way we can track how much an individual spends at a retailer on a given day – but through the internet we have this ability, and can throttle down how much a person spends. This is in addition to other activities laid out in the National Council on Problem Gambling’s Internet Gambling Standards that include self-exclusion, time outs and informed decision making to name a few. Stringent age verification measures at registration – including checking numerous databases – combats underage gambling issues.

MYTH #9:

There is no assurance that lottery drawings are conducted fairly.

Given the cynical nature of today’s players, official lottery drawings are carefully watched and closely scrutinized. And they should be. Lotteries are a significant source of much-needed revenue for state budgets – generating millions of dollars to support important programs and services. Lottery games are also a popular form of entertainment that offers players the potential to win money – sometimes lots of money – quite literally, based on the luck of the draw.

Comprehensive and often tedious security measures and drawing procedures are standard across the industry and crucial to the success of any lottery. As a general rule, all state lotteries are subject to internal and independent audits to verify that their equipment and processes are providing random results. Equipment used for drawings is regularly tested and procedures are recorded on video in the presence of witnesses. In addition, the machines are securely stored, often in a locked vault, and accessed by a limited number of authorized personnel.

While the precise methods vary from state to state, all lotteries have multi-faceted checks and balances to ensure the accuracy, honesty and transparency of every drawing that is conducted. These measures are vital in maintaining player confidence and ensuring the public that the integrity of the lottery is reflected in each and every drawing.

MYTH #10:

Big lottery winners are worse off than if they hadn’t won the lottery.

History shows that the vast majority of lottery winners make positive long-term decisions with their winnings to fulfill the real-world aspirations so many of us share: they invest for retirement, plan for their children’s or grandchildren’s education, buy or remodel their homes, contribute to charities, and invest in their communities. Lottery jackpots are no different in that regard than any other large source of income that a person may receive, from an inheritance to the proceeds from the sale of a business. Careful planning is required to ensure that the money is handled appropriately. Some lottery winners through the years have made poor choices with the money they received. And perhaps it’s just human nature that causes us to remember those examples rather than positive ones. Studies have demonstrated that it takes numerous positive impressions to balance out a single negative one. But when it comes to lottery winners, the facts generally reflect favorable outcomes for them following a big win.

MYTH #11:

Because state governments benefit from lottery proceeds, they can't be trusted to regulate their industry.

We trust states to make their own tax policy – and many other decisions regarding their citizens – so why shouldn’t states be trusted to regulate their own lottery organizations? There is nothing to hide. In fact, lottery files are public record and open to scrutiny by the media and by the citizenry. Lottery board meetings and legislative hearings also are open to the public. And these state lottery proceedings are much more accessible than those of federal regulatory agencies. Thus, states are not hiding lottery information, and if you think they are, you can check it out for yourself. There is no reason not to trust the state’s regulation of lottery programs.

MYTH #12:

“I’ve won the lottery because I got an email or phone call that said so. All I have to do is pay a fee.”

This is a scam more than a myth but deserves mention here. Scams operated by people claiming to represent lotteries are just one of the ways that criminals today attempt to separate you from your hard-earned money. The scams almost always involve an offer of big winnings in return for a bit of your personal information – and more than a bit of your cash. Maybe you’ve gotten an email, letter or a phone call saying, “You’ve won the lottery!” And for a split second you wonder if it’s real. The first question you should ask yourself is: Did I buy a ticket? The only way to win a lottery prize is if you’ve purchased a ticket or entered a drawing.

Never believe someone who claims they can guarantee you a prize. Legitimate lotteries do not guarantee that you will win and do not require people to join prize pools to play.

Never pay processing fees, insurance or commissions to claim a lottery prize. Legitimate lotteries do not require winners to pay anything up front to receive their winnings.

Protect yourself by never giving out your personal information to strangers or sending money to someone who says you've won a prize. Remember, you really can’t have won if you didn’t play.

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