Lottery is a popular way for people to try their luck at winning big money. But how does the lottery work? And what are the odds of winning?
A recurring theme in our reporting is that lottery play is regressive, with the people who spend the most on tickets tending to be those at the bottom quintile of incomes. They are the ones who do not have much discretionary income, and so they might play the lottery to get a few extra zeroes in their bank account. Yet these individuals are also the same people who tell us that they don’t know that the odds of winning are poor.
Some states increase or decrease the number of balls in a lottery in order to change the odds. This is a strategy designed to keep jackpots large enough to attract people who might otherwise not play. Super-sized jackpots also give the games a windfall of free publicity on news websites and TV shows. But if jackpots grow to seemingly newsworthy levels too often, ticket sales may decline.
Another way to improve odds is to choose numbers that are not close together or that other people might also be selecting, such as birthdays or ages. This is similar to the method used by scientists in randomized control tests and blinded experiments.
The final option for increasing odds is to purchase more tickets. But beware: This can quickly become an expensive habit. Then there’s the matter of taxes. Winners face a variety of taxes depending on how they choose to receive their prize. Some opt for a lump-sum payment, while others choose to sell their payments in an annuity. This is a good way to avoid long-term taxes while still getting the proceeds of the lottery in cash.