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Debunking Lottery Myths

We’ve all heard them – erroneous beliefs about lottery operations and games that proliferate through mainstream and social media. These lottery myths can lead the uninformed, the critics and even the players to believe what is simply not true, especially in today’s environment of highly polarized opinions on just about every subject imaginable.

 

Historically, 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 based on continued developments in the industry and new research findings. We therefore present this update of our debunked lottery myths, developed in conjunction with lottery public relations professionals across North America. After all, they are the front-line communications experts who regularly share the issues and concerns lotteries have to deal with on daily basis.

Myth #1:

Lottery is a form of taxation.
 

A tax is compulsory payment to support government. Citizens have no option in contributing to government revenue with mandated levies and other tariffs. In fact, they may go to jail if they don’t pay their taxes and fees. In contrast, playing the lottery is entirely voluntary. 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, claiming there are high administrative costs and that it’s a less efficient way of raising money. In actuality, lottery operating costs average only about 5% of sales. Across the United States, prizes for players make up about 65% of sales and retailers receive about 6% to help their businesses. That leaves about 24% of sales for the good causes lotteries support, such as education, economic development, the environment, senior services – whatever programs political leaders in a given jurisdiction decide its lottery should support. The lottery is simply a form of entertainment that happens to benefit your jurisdiction.

 

Myth #2:

If you don’t win a lottery prize, you’re left with nothing from your lottery purchase. And since there are relatively few winners, hardly anyone actually benefits from lotteries.

All residents benefit financially from having a lottery in their jurisdiction, as all revenue goes to such worthy causes as education, economic development, veterans, tourism, the environment, senior programs and much more. Without lotteries, governments would have to pay for these programs with taxes. On average across the United States, for every $1 spent on traditional tottery tickets, about 24 cents goes to the beneficiaries lotteries support. A lot more than that, about 65 cents of that $1, goes back to players in the form of prizes. And don’t forget about retailers! On average, the small and large businesses that sell lottery tickets get more than six cents of every lottery purchase dollar, benefiting those local businesses every single day.

 

Lotteries also create jobs, directly employing from a few dozen to hundreds of individuals, depending on the jurisdiction. The product and service vendor partners they choose also provide employment, at both their corporate headquarters and with support staff in every lottery jurisdiction.

 

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 imagine 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 #3:

The lottery makes and keeps all the money.

As much as 95% 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 65% in prizes to players, 24% to public beneficiaries and 6% to retailers. The remaining 5% supports lottery operations, providing direct and indirect employment and other benefits. Most lottery operating budgets include responsible gambling and positive play initiatives to keep players informed, while statutes in numerous jurisdictions also set aside a portion of lottery revenues for problem gambling treatment and services.

 

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 more than $30 billion for beneficiaries in fiscal 2023 alone, including additional revenue coming from lottery-operated casino-style games in some jurisdictions.

 

Myth #4:

Gambling addiction has grown because of lotteries.

  • Playing lottery games is a popular form of gambling in the USA and around the world.
     

  • Based on reviews of gambling prevalence studies from around the world, lotteries and instant lotteries appear to be less risky in that they are not linked to a moderate or higher risk of gambling problems.

  • Many research studies note that the past year problem gambling prevalence rate is between 0.1% to 6.0%. A 2022 Canadian study reported a 1.6% past year moderate-severe problem gambling risk. In the United Kingdom (2022), the past year problem gambling rate was stable at 0.3% and the moderate risk rate is 1.1%. A meta-analysis of 23 gambling prevalence studies from a number of countries between 2016-2022 reported an overall problem/pathological gambling rate of 1.29% and a moderate/at risk rate of 2.43%.

  • Overall, the problem gambling rate has remained relatively stable even with the introduction of new forms of gambling. In some cases, the problem gambling rate may rise slightly after introduction of new gaming options and then returns to the previous rate.

  • A 2018 research report noted that exclusively lottery gamblers (France and Quebec), who represent two-thirds of lottery players, generally exhibit less intensive gambling patterns.

  • Members of NASPL (U.S. and Canada) are committed to preventing and reducing the potential for harm from gambling involvement. This is done in each jurisdiction through the funding of player information initiatives, research, and funding treatment and Helpline programs.

  • A majority of NASPL members are certified under the organization's RG Verification Program in partnership with the National Council on Problem Gambling, which assesses their efforts to prevent, educate and support players including those who are experiencing gambling-related harm. Many other lotteries have also attained RG certification under the World Lottery Association (WLA) RG Accreditation Program.

Myth #5:

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, lottery players bought more than $102 billion in lottery tickets in FY23, with another $11 billion in net revenue coming from lottery-operated casino gaming and sports betting. 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.

 

In a 2020 Texas study, almost 57% of past-year Texas Lottery players had annual household income of $50,000 or more; 27% of players had annual household income greater than $100,000. In contrast, only 52% of non-lottery players had annual household income of $50,000 or more, and 25.8% of non-lottery players had income of $100,000 or more.

 

A recent North Carolina study found that lottery players mirror almost exactly the demographics of the general adult population in that state. For example, 29% of lottery players have annual household income of $75,000 or higher, compared to 28% of the general population.

 

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 #6:

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

On the contrary! There are now 11 American lotteries that offer sales online, limited to players located within their borders at the time of purchase. The first was the Illinois Lottery in 2012; the most recent was the DC Lottery in late 2020. In every case, retail lottery sales – and retailer commissions – have increased since the advent of iLottery. This is consistent with the long-term experience in other countries, including Canada.

 

In all cases, iLottery has increased public awareness and interest in lottery games and has attracted new customers for all games. It is important for lotteries to broaden the industry’s customer base by attracting new – and younger – players to their games. If the pandemic taught us anything, it’s that consumers depend on the internet for personal, business and entertainment reasons. Adapting to the widespread use of that technology can position lotteries and retailers for ongoing success in the future.

 

Offering games through digital channels can also create new sales opportunities for retailers as well as lotteries. For example, lotteries may offer account funding through the retail purchase of online “gift cards,” and also encourage cross-channel play by driving online customers to retail with coupons and special offers.

 

Myth #7:

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

In many respects, online lottery sales provide opportunities for a MORE responsible platform due to key elements that are not available with traditional play at retail. After all, online players are known players, and as such there are tools and techniques available to focus on player health and responsible play. These include:

 

  • Limits on play. Online platforms have daily, weekly and/or monthly deposit limits that address how much a player can put in their account for wagering. In contrast, there’s no way we can track how much an individual spends at a retailer on a given day.

  • Messages to players. Lotteries can send messages directly to players, such as reminders, timeout inquiries, links to online resources for informed decision-making, and other options based on actual play.

  • Self-exclusion. Players can choose to exclude themselves from play for specified periods of time, or even permanently. This is not a realistic option with retail lottery sales.

 

All of these things and more are spelled out in the National Council on Problem Gambling’s Internet Responsible Gambling Standards, a valuable guide for lotteries with online play. Importantly, stringent age verification measures at registration – including checking numerous databases – combats underage gambling issues.

 

Myth #8:

There is no assurance that lottery drawings are conducted fairly.

Official lottery drawings are carefully watched, closely scrutinized and certified by independent auditors. And they should be. Lotteries are a significant source of much-needed revenue for state budgets – generating millions of dollars (in some cases billions) annually 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 – 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 #9:

Big lottery winners become worse off than they were before they 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, and these days we see most big jackpot winners take plenty of time before submitting a claim as they make all the right decisions. Sure, some lottery winners through the years have made poor choices with the money they received, as have other recipients of unexpected windfalls. And perhaps it’s just human nature that causes us to remember those few negative examples rather than the multitude of positive ones. After all, numerous academic and business studies have demonstrated that it takes many positive impressions to balance out a single negative one; often the ratio is considered to be five to one.

            

           

Myth #10:

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, most 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 #11:

The lottery controls where winning scratch-offs are sold. That’s why all the big winners are from big cities, and no one in less-populated areas ever wins. Corollary: “No one in my state ever wins Powerball or Mega Millions.”

No lottery has any way of knowing where or when a winning scratch-off for any particular amount will be sold. For each scratch-off game, the number of tickets printed is often in the millions, and the winning tickets are randomly dispersed throughout many thousands of books of tickets during the printing process. At any given time, most lotteries have tens of millions of tickets awaiting distribution to retailers. Retailers receive deliveries of tickets as needed, based on their levels of sales, so retailers in highly populated areas receive new supplies more frequently than retailers in areas with less population. Statistically speaking, it’s likely for there to be more winners in highly populated areas simply because there are more retailers and more tickets being sold in those areas.

 

The same principles apply to draw products like in-state lotto games and big games such as Powerball and Mega Millions. More tickets are sold in areas or jurisdictions with larger populations, so it makes sense that more winners usually come from those areas. That said, lottery games are truly random, and it only takes one ticket to win. Winning tickets can be sold anywhere, from the largest jurisdictions to the smallest.

 

Myth #12:

The odds to win a big jackpot get worse as more people play the game.

Players often think that the more people who purchase tickets for a draw game, especially the big games like Powerball and Mega Millions, the worse their odds are to win. The reality is that the odds on draw games are set based on the game design and do not change based on play; the number of people playing does not impact your likelihood of winning a prize. That said, as more and more players purchase tickets for a drawing, the odds of having to split the jackpot increase since it becomes increasingly likely that there could be more than one winner.

 

Myth #13:

“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, if you didn’t play, there’s no way you could have won. Even if you are a regular lottery player, you could still be the target of a scam, so be vigilant – the warning sign ALL scams have in common is that you are asked to pay money up front to receive your “winnings.”

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