Gambling
Lotteries
March 09, 2006
Man is not made for games
and games are made for man. Lotteries come in many
formats. The prize can be fixed cash or goods. In this
format there is risk to the organizer if insufficient
tickets are sold. The prize can be a fixed percentage of
the receipts. A popular form of this is the "50-50" draw
where the organizers promise that the prize will be 50%
of the revenue. The prize may be guaranteed to be unique
where each ticket sold has a unique number. The
Lotteries are most often run by governments or local
states and are sometimes described as a regressive tax,
since those most likely to buy tickets will typically be
the less affluent members of a society. The
astronomically high odds against winning have also led
to the epithet of a "tax on stupidity". The phrase is
largely rhetorical (playing the lottery is voluntary;
taxes are not), but it is intended to suggest that
lotteries are governmental revenue-raising mechanisms
that will attract only those consumers who fail to see
that the game is a very bad deal. The desire of lottery
operators to guarantee themselves a profit that requires
that a lottery ticket be worth substantially less than
what it costs to buy. After taking into account the
present value of the lottery prize as a single lump sum
cash payment, the impact of any taxes that might apply,
and the likelihood of having to share the prize with
other winners, it is not uncommon to find that a ticket
for a typical major
gambling lottery is worth
less than one third of its purchase price.
The fact that lotteries are commonly played in leads to
some contradictions against standard models economic
rationality. However, the goal of some players may not
be to win the game, but merely to have a thrill and
indulge in a fantasy of possibly becoming wealthy. This
is particularly popular among those who believe their
chances of becoming rich are already zero, so even if
the lottery's odds are awful, they are better than zero.
A lottery is a popular form of gambling which involves
the drawing of lots for a prize. Some governments forbid
it, while others endorse it to the extent of organizing
a national lottery. It is common to find some degree of
regulation of lottery by governments.
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