How To Gain a 'Lotto' Money Without Ever Playing the Lottery
Who doesn’t dream of winning the lottery?
A few years ago, a record-breaking Mega Millions - worth a jaw-dropping $476 million- was sold at a convenience store near my home. After taxes, the winner walked away with $156.7 million. Not bad for a lucky pick.
Having a new mega-rich neighbor somewhere out there got me thinking maybe I should seek my fortune in the lottery. Could my retirement plan really be as simple as hitting a few lucky numbers?
Someone has to win it, why not me? All I need is a dollar and a dream, right?
That's what I thought ...until I took a closer look at the numbers. And what I discovered changed everything.
Table of Contents
What Is The Lottery?
The lottery is a game of chance, typically run by state governments to fund public programs like education. Players buy tickets, and winning numbers are drawn at random. "Lotto" is a specific type of lottery where players choose their own numbers, often with smaller jackpots. For simplicity, we'll use "lottery and "lotto" interchangeably here.
Massive jackpots often get major media attention, fueling a surge in ticket sales. Just like the one near my home - a single winner took home $156.7 million after taxes - an overnight transformation that shows how tempting and misleading, the dream of sudden wealth can be.
Why Are So Many People Obsessed With Winning the Lottery?
The lottery can mean different things to different people. While playing the lottery can be harmless entertainment for most, it can also become a serious gambling addiction for others. The allure of a potential tremendous payoff is combined with impossibly low odds of winning. This can cause unrealistic expectations and financial strain on the very people who can least afford it. The poor account for a disproportionate amount of lottery sales.
What’s the allure? Everyone has a dream of living a luxurious lifestyle, therefore rationalizing spending a couple of dollars on a chance to win the huge jackpots. This fantasy is an escape from the stresses of life and their financial strains.
Do Marketing Campaigns ‘Ad’ False Hope?
The very low odds of winning are totally abstract for most people to understand. They figure someone has to win it, why not them? After all, as the ads say “You have to be in it to win it” and “Hey, you never know.” Can’t argue with that, right?
The promotion of the lottery in advertising so effectively plays on the most vulnerable and their dreams of becoming instantaneously rich. In addition to the more memorable ad campaigns, Mega Millions went as far as putting up a banner on their website that read “Save For Retirement”. After being called out for obviously deceptive advertising, they took it down.
Lottery Marketing’s Greatest Hits
The lottery does a great job of marketing the lottery to its target audience. In no particular order, here are some of the greatest hits of lottery ads through the years:
“Hey, you never know” (New York Lottery, 1990s)
“All it takes is a dollar and a dream” (New York Lottery, 1970s)
“If you don’t play, you can’t win” (Florida Lottery, 1980s)
“Believe in your dreams” (Powerball, 2003)
“Just imagine” (California Lottery, 1990s)
“You keep playing, we’ll keep paying” (Pennsylvania Lottery, 1980s)
“Imagine the possibilities” (Powerball, 2016)
“Have a ball, play them all” (Massachusetts Lottery, 1980s)
“We’re making more and more millionaires every day” (California Lottery, 1990s)
“Take a chance on education” (Georgia Lottery, 1990s)
“Feel the thrill of the game.” – California Lottery (1990s)
“The more you play, the more we pay.” – Powerball (2000
“It’s a whole new ball game.” – Mega Millions (2000s)
“Play the Lottery, it’s the law.” – Multi-state Lottery Association (1980s-1990s)
“Get your ticket to freedom.” – Texas Lottery (1990s)
“When you win, we all win.” – Illinois Lottery (2000s)
“Everybody’s playing.” – Pennsylvania Lottery (2000s)
“Play today, cash in tomorrow.” – Arizona Lottery (1990s)
“All you need is a dollar and a dream” – New York Lottery
“You gotta be in it, to win it” – New York Lottery
Do you see a pattern? How do you feel about reading these? I don’t know about you, but I want to run out and buy some lottery tickets. The ads and slogans fill me with false hope.
So far, we looked at the marketing behind the lottery that entices people with false hopes of winning an instantaneous fortune.
Let's take a deeper look into the problems that lottery marketing will never show: the almost impossible odds of winning the lottery and the troubles encountered by lottery winners.
What Are The Chances of Winning The Lottery?
For this post, let’s look at the odds of winning the mega jackpots, not the small prizes as these don’t impact a person’s life. These mega jackpots are life-changing money.
The chances or odds of winning a huge lottery jackpot are so impossibly low it is too difficult and abstract to understand. The odds of winning the Powerball jackpot are approximately 1 in 292 million (292,000,000), while the odds of winning the Mega Millions are approximately 1 in 303 million (303,000,000).
To make these less abstract, compare the odds of winning the lottery to the odds of getting struck by lightning. The odds of you getting struck by lightning in your lifetime are much higher at 1 in 15,300 According to Newsweek, you are equally likely to be struck by lightning 250 different times than you are to ever win the lottery!
Think about this, your chance of winning the lottery is so low, that it is almost incomprehensible. Just in case, you think you can raise your odds by buying extra tickets, it is important to remember that this doesn’t significantly increase your chances of winning. It only increases your chances of losing your money faster.
What Are Other Problems with The Lottery?
The marketers of the lottery would have you believe you will live your best life while contributing to great societal needs. But playing the lottery regularly is not always a harmless form of entertainment. We looked at the false expectations a person can develop. Here are some more potentially serious problems associated with playing: :
Gambling addiction: Playing the lottery, like any form of gambling, can be addictive for some people. When someone finds themselves spending more money on tickets than they can afford, and ignore warnings from friends and family, they may be falling into a gambling addiction.
Financial difficulties: Some people may also spend more money on tickets than they can afford, which can lead to financial difficulties. Plus, there is always an opportunity cost involved in spending discretionary money. The opportunity cost is what you could be spending that money on instead, for example; saving for the future.
Fraud and scams: Beware of the many fraudulent schemes and scams associated with Lotto, such as fake lottery tickets or phone calls claiming that the recipient has won a prize. Be cautious and protect yourself from these scams. If it sounds too good to be true, it probably is.
Who Wants to be a Millionaire?
You may think, if you win, you will have no problems. Let’s look at some of these problems lottery winners never expected would happen to them.
What Really Happens After Winning The Lottery?
The CFP Board of Standards says nearly one-third (33%) of lottery winners eventually declare bankruptcy. Lottery winners are more likely to declare bankruptcy within three to five years than the average American. In fact, even the neighbors of lottery winners are more likely to go bankrupt than the average American, as a result of ‘keeping up with the Joneses”.
Almost two-thirds (70%) of people who receive a large sum of money at one time, regardless of the circumstances, lose it all within several years and are more likely to go bankrupt at twice the rate of the general population.
How can that be? It sounds counterintuitive but remember the lottery winner has now received instantaneous wealth. They are probably not prepared or competent to handle their newfound wealth and the stress that accompanies it.
There is an old saying that If you take a millionaire’s money away and give it to a poor person, in a few years the millionaire would be rich again and the poor person would be poor again. The suddenness of life change is stressful and a big sum of money can’t fix all of life’s problems. Old habits die hard. The poor person may now have the money but not the good money habits, behaviors, and mindset to stay rich,while the millionaire who lost all their money has the good habits, behaviors, and mindset to become rich again.
Lottery Winner Stories
Winning a large sum of money can create its own set of problems. The unexpected and instantaneous nature of winning the lottery can cause gross mismanagement of the finances and pressures from family and friends. Here are some lottery winners who wish they never won the lottery in the first place:
Andrew “Jack” Whittaker Jr.: In 2002, Andrew “Jack” Whittaker Jr. of West Virginia won a $314.9 million Powerball jackpot, the largest jackpot ever won by a single ticket at the time. Whittaker used his millions in a positive way by donating millions to charities. However, he also experienced several tragedies after winning the lottery, including thefts, lawsuits, and the deaths of several family members. He lost a large portion of his winnings and has said that winning the lottery ruined his life.
Denise Rossi: In 1997, Denise Rossi of California was in the middle of a divorce when she won $1.3 million in the lottery but decided to keep it a secret from her husband. During the court proceedings, she did not disclose her winnings as an asset. After her ex-husband found out about the lottery winnings, a court invalidated the divorce settlement and awarded him the entire amount.
Abraham Shakespeare: In 2006, Abraham Shakespeare of Florida won a $31 million jackpot. However, he was later approached by a woman who convinced him to give her most of his remaining money, and he was eventually found dead, buried under a concrete slab in the backyard of the woman’s boyfriend’s house.
David Lee Edwards: David Lee Edwards won a $27 million Powerball jackpot in 2001, but ended up homeless before his death in 2013 by spending his money on drugs and a lavish lifestyle.
Should I Play The Lottery or Save My Money?
Playing the lottery over a long period of time in hopes of finding your fortune is almost certain to leave you with empty pockets. The opportunity cost is great because the money a person consistently spends on tickets could have been saved and invested instead over many years. Over time, even a small amount of money saved and invested has a much better potential to gain a ‘lotto’ money than playing the lottery.
Save Your Way To Wealth
If you want to become a millionaire there is a more tried and true way. Becoming a millionaire slowly during your lifetime is not as rare or impossible as you might think. The lottery ads state “All you need is a dollar and a dream”. With saving and investing you can also start off with a small amount of money and a dream. All you need is a little money to save and invest along with discipline and consistency over a period of time. Slow and steady wins the race.
In fact, most millionaires in America accumulated their fortunes by investing in the stock market over a long period of time, such as 30 years, the typical amount of time for a career. The earlier you start to contribute to a 401k plan at work, IRA ( Roth or Traditional), or low-cost index funds in a regular taxable account, the better the long-term outcome.
Compound Interest Calculator
Don’t take my word alone; math doesn’t lie. So let’s do some math to see how this works over the long term. We will run a scenario of money growth over time through an online compound interest calculator.
In our first example, let’s use $3,500 as the amount spent on the lottery every year for 20 30, 40, and 50 years. This amounts to a habit of about $9.60 per day spent on lottery tickets. These amounts were entered into an online calculator (link below) at a 10% annual interest rate compounded 4 times per year at the start of each compounding period.
Here are the results:
Our example shows the power of compounding interest very much at work. After 20 years, you have accumulated $248,001.73. If you keep investing and you let it grow, after 30 years, you will have $726,352.15, after 40 years, you have $2,010,753.56 and after 50 years you have $5,459,453.32.
Compounding interest is so powerful over time because the interest grows exponentially. Time and compound interest together provide astonishing gains through the years.
Over the years, instead of being left with empty pockets, you have created an impressive nest egg.
By saving and investing, the odds are more in your favor to have gained a ‘lotto’ money.
After 20, 30, 40, and 50 years, your spare lottery money has provided you with the fortune you were originally hoping forby winning the lottery. Now you have many, many dollars to go and live your dreams.
Plug in your own numbers and see for yourself, using this compound interest calculator from Investor.gov.
The Bottom Line On Gaining A ‘Lotto’ Money Not Playing The Lottery
The potential of sudden wealth is both the allure and problem of lotteries. The dreams of winning the lottery can cause false expectations and financial strain on the very people who can least afford it, as the poor account for a disproportionate amount of lottery sales.
The impossibly low chance of winning the lottery is an abstract concept that is difficult for most people to understand. Marketing of the lottery in ads and slogans through the years has contributed to the false hope of becoming instantly wealthy. Even winning the lottery is steeped in its own problems that could change and ruin a person’s life.
You don’t need to win the lottery to gain wealth. Becoming a millionaire over time is not as rare as you might think. People don’t think twice about spending money on the lottery without understanding the opportunity cost. Even with small amounts saved and invested consistently you can gain wealth and become a millionaire over time without the traps of the lottery.
The information presented in this post is solely for your general financial education and is not to be considered financial advice. Always check with your trusted financial professional who will consider your unique situation and goals to develop your own personalized comprehensive financial plan. 
