Inflation Hurts The Poor The Most

It’s true, isn’t it?  It’s all about percentages.  When you typically spend $1000 in gas a year and that cost goes to $2000, that’s a much more significant impact on someone making $18,000/year vs. someone making $60,000/year vs. people making six figures.  So imagine how shocked I was when I bought lottery tickets at the store and the price had doubled.

“I’ll take 5 for tonight’s Powerball”

“Sure, that’ll be $10.”

The first thing I thought was that she rang up power play tickets.  Nope, the cost of lottery just went up.  Most state lotteries are pretty transparent – they will show where the money is being spent.  I wasn’t able to easily find any information about how Powerball proceeds are divvied up.  It’s probably just as well not to know; the obvious thing is they need more operating money, so they changed the odds to withhold more money for themselves.

The most ironic thing I find about lotteries is their fairness.  The odds are SO high that it can be nothing but luck to win.  There’s no way an obscenely rich person could leverage their money to ensure a win.  A millionaire and a bum have an equal chance of winning with a $1 ticket.  Excuse me, a $2 ticket.  And that’s where I’m a little irked.  Putting aside the obvious cases where people overspend on lottery and treat it less like gaming and more like a religion – in that they make an offering and hope the god of chance accepts their offering and blesses them with riches. But I digress.  Aside from those cases, this is simply a higher barrier to entry. 

A hypothetical family may just pick up 5 or 10 tickets a week – like me, a casual gamer.  That cost of entertainment just doubled.  That impact is going to be felt much stronger by someone who doesn’t have as large of an entertainment fund.  Now, the person who has more disposable income can shrug off the increase, while other people may have to reduce the number of tickets they buy to meet their budget.  Now, the rich person has a higher chance of winning.

Now, the most shameful part of this “improvement” is how the change is being marketed. “Bigger!” “More!” “Better!”  There is no value to any of it.  What are these incredible changes?

  • Starting jackpot goes from $20M to $40M.  Well, of course.  The ticket price doubled.
  • 2nd prize goes from $200K to $1M.  It’s the exact same thing you used to get when you spent the extra dollar in the old version. Now you just don’t have that option.
  • Powerball-only prize goes from $3 to $4. The most insulting change of all. Your winnings go from 300% to 200%.
  • Odds to win Jackpot goes from 1:195M to 1:175M.  This is still so high as to be irrelevant.  Someone is going to win eventually.  It may be you, it may be someone else.
  • Overall odds goes from 1:35.1 to 1:31.8. So before, you could theoretically win something if you spent $36. Now, you can theoretically win something if you spend $64. This is key.  If you happen to get one Powerball-only win in all those plays in the old game, you have lost $33.  In the new game, you have lost $60.

It’s been said to death that lottery is for the mathematically challenged, which is untrue.  I might be inclined to believe it’s for people who can’t grasp the concept of huge numbers.  I have no problem with the odds.  I do have a problem when companies try to market less as more.  In summary, the new Powerball has better odds at winning less, while costing more to play.

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