The Truth About Lottery Prizes
When a lottery announces a huge prize, like the $1.765 billion in the current Powerball jackpot, it doesn’t actually have that amount sitting around ready to be handed over to the winner. Instead, the prize is calculated based on how much you’d get if the entire prize pool was invested in an annuity that pays out annual payments for three decades.
In the immediate post-World War II period, when states were able to expand their array of services without especially onerous taxes on the middle and working classes, lotteries became a convenient way to raise money. They were seen not as a little drop in the bucket but as a source of revenue that could enable states to eventually do away with taxation altogether.
There’s a simple reason why people play the lottery: they plain old like to gamble. That’s why you see billboards on the highway promising instant riches. But there’s also a bigger problem: Lotteries are dangling the promise of wealth in an age of inequality and limited social mobility.
The most common form of a lottery involves paying for the chance to win a prize, which can range from money to jewelry or a new car. The word lottery is from the Latin for fate, or luck, and the idea of winning the lottery reminds us that life is a game, and the results depend on chance. (Webster’s New World College Dictionary, 4th Edition.) Copyright