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Lottery

August 23rd, 2001

It occurs to me that the lottery can be construed as a voluntary tax. I don’t mean that in the sense of the old line “… tax on people who are bad at math.” I mean much more directly. If a state runs a lottery they convince some number of people to buy in. Each of those people gives the governmental organization $x. The government takes .33x to finance schools or some such, that is the direct tax. Whatever is left is eventually awarded to some schmuck who buys into this game. The IRS immediately swoops in the collect 50+% or winnings as the indirect tax. In general meaning the government has just 66%+ of the lottery money into their own pocket from those who can ill afford to give.

Exact numbers and percentages may be off, underlying theory is sound.

It strikes me that the lottery is the dollar auction game on a grand scale.

The Dollar auction game is played by saying. I will auction off this dollar bill, lets start the bidding at 10 cents. The wrinkle is that the top 2 bidders have to pay me but only the top bidder gets the dollar. Psychological tests of the dollar auction indicate the average winning bid is between $3 and $4. Auctions often end when someone runs out of money.

The lottery over time is such an auction the participant is invested in the auction by buying tickets over time. They misjudge the meaning of statistics and feel like they are favored since they have invested so much in the past.

It is a sad and dishonest and should be illegal like other con games.

Culture, Politics

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