1 in 292,201,338

THE ODDS OF WINNING ARE

1 IN 292, 201, 338 The Pudding

1 1

$4.00 1 in 38.32

$7.00 1 in 579.76

= Two Commercial Planes

$100 1 in 36,525.17

= Large Stadium

$50,000 1 in 913,129.81

= San Francisco Population

$1,000,000 1 in 11,688,053.52 = Los Angeles Population

JACKPOT

1 IN 292,201,338

= US Population

PUBLISHED BY

The Pudding The odds of winning the Powerball jackpot are 1 in 292 million, yet millions, especially from lower-income communities, are lured in by the promise of instant wealth. While a jackpot win may offer overnight wealth, winners often face financial and psychological ruin. In this issue, we will examine the marketing strategies and societal effects of lotteries, focusing on their impact on more vulnerable populations.

$XXX 1 in XXX

Powerball Prize The Odds to Win

AMERICA’S POWERBALL ADDICTION

“Lotteries have the paradoxical effect of offering an improbable chance at prosperity while diverting attention from achievable and lasting economic avenues.”

-Philip Cook, Stanford Public Policy Professor The Powerball lottery, a widely recognized multi-state game in America, has sparked dreams of striking it rich since its establishment in 1992. Powerball has set itself apart with an innovative dual-drum system, using one drum for the main numbers and one for the Powerball number. This increased both the excitement of the draw and the potential for larger jackpots, attracting a broad audience and quickly cementing Powerball’s place as the biggest lottery.

Currently played in 45 states, Washington D.C., Puerto Rico, and the U.S. Virgin Islands, Powerball’s popularity remains strong, with twice-weekly drawings. However, this structure means that while jackpots reach record-breaking amounts, the odds of winning remain extremely slim—It is now about

1 in 292 million for the top prize. Critics argue that this reality, combined with the heavy promotion of the game, can lead to unrealistic expectations, especially in lower-income players.

Despite these concerns, the Powerball lottery is a significant source of revenue, with a portion of proceeds funneled into state programs for education, public safety, and others. This has led to a complex debate: while Powerball continues to be celebrated for its potential to change lives overnight, it raises challenging questions about its role in society and its impact on financial well-being in different communities. The lottery’s promise of instant wealth continues to propel its widespread popularity across the nation, drawing millions of participants who are eager to take a chance.

AMERICANS SPENT $108 BILLION ON TICKETS IN 2022.

THAT’S AROUND $375 PER PERSON.

The Gini Index

Prizes per Capita

A measure of economic inequality within a population.

A higher number = greater gap in income distribution.

Losses per Capita

1,000

900

$970 MA has consistently been the highest per capita spenders, lottery participation is embedded in MA culture.

Economic Inequality (Gini Index)

Lottery Sales per Capita ($)

2

800 You may expect states with higher incomes to have more sales. Statistically, those of lower income buy more, driven by the hope of overnight wealth.

700

0.50

600

0.45

500 Although lottery systems may appear to offer more prizes than losses per capita, these winnings are distributed unevenly. A small number of players win large sums, while the majority either win minor prizes or nothing at all.

400

Overall, states with less economic inequality have lower lottery ticket sales. $37 ND consistently ranks low in lottery sales, due to its rural and conservative culture.

300

200

0.40

100

0

MA GA MI RI SC CT MD NY FL WV PA NJ DE VA KY NH NC OH MO IL ME TX TN SD OR IN VT CA AR AZ ID MS WI IA MN LA CO WA KS NE OK NM MT WY ND

OVERALL, WHICH STATES SPEND THE MOST? 1. NEW YORK 2. FLORIDA 3. CALIFORNIA 4. TEXAS 5. MASSACHUSETTS

$10.5 B $9.8 B $8.7 B $6.1 B $5.8 B

MASSACHUSETTS

NORTH DAKOTA

Population

The Greatest Per Capita

Gini Index (Economic Inequality)

0.4

0.3

Population

0.35

The Lowest Per Capita

0.2

6,000,000

6,000,000

3,000,000

3,000,000

0.1

10 5

30

50

70

Diversity Index

Gini Index (Economic Inequality)

0.4

0.3

0.2

0.1

10

50

70

5

15

15

25

25

35

35

45

% of Liberals

30

% of Liberals

0.30

Diversity Index

“Lotteries are a regressive form of tax that takes the most from those who can least afford it. They thrive on the dreams of the poor, who see them as the only means to escape their hardship.”

Drawings are broadcast live on TV across the US every Mon, Wed, and Sat since 1988.

– David Nibert, Author and Sociology Professor However, studies show that states with larger economic and social inequality gaps often have higher lottery participation, as individuals with limited financial resources are more likely to view the lottery as a feasible pathway to sudden financial improvement. This is driven by a mixture of hope, desperation, and the perception that the lottery offers an accessible, low-cost chance at getting life-changing wealth. For many in these communities, traditional ways for economic advancement, such as higher education or investment opportunities, may seem out of reach due to systemic barriers.

The allure of the Powerball is further amplified by targeted marketing strategies. Lotteries are frequently advertised in areas with higher poverty rates, often emphasizing the idea

that anyone can be a winner, exploiting the hopes of those struggling to make ends meet. In this context, it becomes more than just a game; the lottery is seen as one of the few opportunities for upward mobility.

This dynamic creates a troubling cycle where people who can least afford it are spending the most on tickets. Instead of fostering economic stability, lotteries often make financial struggles much worse, diverting money that might otherwise be used for essentials such as food, healthcare, or education. Addressing this issue requires a critical analysis of how lotteries are marketed, the use of targeted advertising and psychological appeals, and the financial burden they place on vulnerable populations.

Annual Ticket Revenue per Capita

AMERICA’S POOREST HOUSEHOLDS SPEND 30X MORE THAN THE RICHEST HOUSEHOLDS. 700

Source: State lottery commissions; Census Bureau 2021 analysis across 24 states

TARGETED MARKETING

The average adult living in the poorest 1% of zip codes spends around $650 on tickets, or 5% of their income.

Lotteries aggressively target lower-income communities, exploiting their hopes for financial freedom through ads.

600

500

400

Those living in the wealthiest 1% of zip codes spend only $150 on tickets, or 0.15% of their income.

Each 10% decrease in median household income is linked to a 4% increase in lottery spending.

300

200 Average household income of zipcode ($1000) 0 20

40

60

80

100

The Diversity Index:

120

140

160

180

200

% of Liberals:

GREATER DIVERSITY, GREATER LOTTERY PLAY

POLITICAL VIEWS INFLUENCE LOTTERY HABITS

States with larger ethnic and racial diversity often experience higher lottery participation due to the varied cultural attitudes and economic perspectives found within these communities.

Groups such as Black/African Americans and Hispanics, who have higher reported rates of lottery play, contribute significantly to overall participation. This can be linked to the systemic inequality and barriers that have historically contributed to poverty within these ethnic groups.

States that lean left or are more liberal tend to have higher levels of cultural openness, which can translate to more acceptance of activities such as playing the lottery. Liberal-leaning states often foster environments that emphasize personal freedom and recreational choices, making lotteries more socially acceptable. More religiously conservative states or communities may discourage gambling due to moral or ethical concerns rooted in their beliefs.

“Groups such as Black/African Americans and Hispanics, who have higher reported rates of lottery play contribute significantly to overall participation.”

"It is a serious moral issue when government budgets are built on the backs of the poor by encouraging excessive lottery play as a solution to economic woes."

-Journal of Gambling Studies

– United States Conference of Catholic Bishops

220

3 3

DOES MONEY REALLY BRING HAPPINESS, OR JUST MORE TROUBLE? Statistically, smaller prize winners spend wisely, whereas larger jackpot winners are at a higher risk of financial mismanagement, overspending, and bankruptcy.

While smaller prize winners most often see their winnings as a financial boost and use it to pay off debt, invest, or save, larger jackpot winners face unique challenges that increase their risk of financial ruin. Statistics show that winners of massive jackpots are prone to overspending and poor financial decisions, which often lead to bankruptcy. According to the National Endowment for Financial Education, nearly 70% of individuals who come into sudden wealth end up losing everything within just a few years.

The psychological shock of wealth can prompt sudden lifestyle changes, lavish pending, high-risk investments, and gambling.

On top of everything, pressure from friends and family can also intensify these behaviors.

State laws also play a crucial role. In some states, winners can claim their prize anonymously, protecting them from unwanted attention. However, many states mandate that winners disclose their identity, which often leads to extensive media coverage and exposes them to the public. Without any anonymity protections, winners can become targets for opportunistic financial advisors, distant family, and even fraudulent schemes. The combination of intense lifestyle shifts, social pressures, and a lack of anonymity marks the importance of financial planning. External pressures and the psychological drive to fulfill new desires propels winners toward instability rather than security.

LOTTERY HEROES WHO GAVE BACK

"The to de a pla

Paul and Sue Rosenau $180 million

Brad $220

Established the Legacy of Angels Foundation to honor their granddaughter, who passed away from Krabbe disease. They fund research to improve treatment and find cures for rare genetic disorders.

Establis Founda health a initiative lab and in his ho

LOTTERY WINNERS WHO FACED “Nobody has ever blown lottery winnings in a more dangerous and destructive way than you did.”

-Chief U.S. District Judge Lisa Godbey Wood

COMMON RISKS TO RUIN AND BANKRUPTCY

40%

25%

Overspending on luxury items Tax misunderstandings High-maintenance purchases Poor investment choices

Anxiety due to the spotlight Strained relationships Impulse purchases Addictive behaviors

30%

15%

PSYCHOLOGICAL STRESS

LACK OF FINANCIAL LITERACY

EXPLOITATION & SOCIAL PRESSURES

They prioritized financial planning, setting Scams posing as up financial experts trusts for their family and donating their local Predatorytoadvisors food bank. Despite their wealth, they continued Fraud investment opportunities living in their same home, focusing on family and Lawsuits & legal manipulation community rather than lavish spending.

Over giving to family and friends Exploitative financial advisors and lawyers Requests from unsolicited organizations

Triumphs

Identity theft

CAN I STAY ANONYMOUS 2012 AFTER WINNING THE LOTTERY? When winners must disclose their identity, they become instant public figures, facing scams, harassment, and exploitation from financial advisors to distant relatives. This leads to risky financial decisions or overspending to meet the pressures.

Ronnie Music Jr. $3 million

Aman $1 mi

Invested most of his prize in a methamphetamine trafficking ring.

He was caught and sentenced to 21 years in federal prison.

Continu benefits criminal died of year at

“My g mone I don’

FRAUD & SCAMS Jim and Carolyn McCullar $190 Million

Tragedies

4

Marie Holmes $188 million

Jack $314.

Spent millions bailing out her boyfriend who faced repeated drug trafficking charges. Even from prison, he sued her, claiming she’d given away property he considered his.

Faced r and trag his dau substan passed fortune

"I thought all these people were my friends, but then I realized all they wanted was just money."

NO, must fully disclose YES, can stay anonymous Partially, not all info

No lottery system

Can only stay anonymous if prize surpasses a set amount e.g., In Texas, winners of prizes of $1 million or more have the option to remain anonymous.

Abraham Shakespeare $30 million

Jeffr $20 m

He generously helped friends and family. Dee Dee Moore befriended him under the guise of a financial advisor, but instead embezzled his funds and murdered him.

Support in his g few yea her boy him, se

70%

OF TH GO BA

5

Healthcare

Housing/Hunger

e biggest piece of advice...You really have efine what's important to you, and develop an around it."

Gifting to friends and family

"As much as I am ecstatic to have won the Powerball, the real winner is the California public school system."

Duke 0 million

Lerynne West $343.9 million

Edwin Castro $2.04 billion

shed the Duke Family ation, supporting children's and education. They fund es like building a computer d improving athletic facilities ometown.

Established the Callum Foundation after her late grandson, to support causes such as poverty, education, and veteran welfare. She donated generously for injured veterans.

Won the record Powerball jackpot.

While enjoying his wealth through luxury purchases, he also committed to using his winnings to support kid’s education and community initiatives.

D TRAGEDIES

Education

Overspending on luxury items

Substance Abuse

Gambling

Over giving to family/friends

Death/Murder

Theft/Fraud

“I didn't think I could ever run out of money.”

nda Clayton illion

David Lee Edwards $27 million

Jason Kurland “The Lottery Lawyer”

ued to collect welfare s after her win, leading to l charges. She spiraled and a drug overdose later that age 25.

Spent millions on luxury items and drugs. He and his wife developed severe addictions, leading them to poverty within five years, ultimately having to live in a storage unit.

Sentenced to 13 years in prison for defrauding lottery winners of over $100 million. He steered them into investments in businesses he secretly co-owned for kickbacks.

granddaughter is dead because of the ey. I wish that we had torn the ticket up… ’t like what I’ve become.”

“I wish it never happened. It was totally a nightmare. I was much happier when I was broke.”

k Whittaker .9 million

Manuel Franco $768.4 million

William "Bud" Post $16.2 million

repeated theft, legal issues, gedy, including the death of ughter and granddaughter to nce abuse that he fueled. He away with much of his gone.

The huge jackpot lead to paranoia, sleepless nights, and a sense of danger that took an emotional toll.

Scammers created fake websites and messages pretending to offer donations on his behalf.

Splurged on a mansion, cars, and boats. His family exploited him, and his brother even attempted to have him killed. He went bankrupt, calling his lottery win a nightmare, and he passed away penniless.

2023

“Money is the root of all evil. Keep it to yourself and don't trust anybody but family."

rey Dampier million

Sharon Tirabassi $10.5 million

Ibi Roncaioli $5 million

ted his family and invested gourmet popcorn business. A ars later, his sister-in-law and yfriend kidnapped and killed eeking his fortune.

Quickly spent all her winnings on mansions, cars, and luxury items. A decade later, she was back working minimum wage to support her kids.

After secretly giving much of her lottery winnings to her son from a previous marriage, Roncaioli’s husband found out and poisoned her. He was sentenced to prison.

HOSE WHO COME INTO SUDDEN WEALTH ANKRUPT WITHIN A FEW YEARS. Source: National Endowment for Financial Education, 2014

WHERE DO LOTTERY FUNDS REALLY GO? Lottery Ticket Revenue

28% State Government

Lottery tickets in participating states are readily available and can be purchased at local gas stations and supermarkets for a small price.

Powerball tickets, for example, cost $2. These add up to become the billions of dollars that begin the flow of money. The majority of tickets are purchased by those in low-income classes.

Powerball’s contributions to state budgets can be substantial, especially during high jackpots. However, because each state controls its funds independently, the impact can vary widely.

MAJORITY NEVER REACHES THE WINNER It’s easy to get swept up in the dream of life-changing jackpots and the excitement of playing the game. However, have you ever stopped to wonder where all that money really goes? While the headlines boast massive payouts, a significant portion of the prize money never reaches the winner’s hands. Federal and state taxes take a hefty cut, reducing the advertised jackpot to a much smaller sum. For every dollar spent on tickets, only a portion is set aside for prizes, with the rest allocated to administrative costs, retailer commissions, and state-designated programs. This raises some critical questions: Who truly benefits from the lottery system? Are the promises of supporting education, infrastructure, or community development being fulfilled, or are these funds being redirected in ways that don’t align with public expectations?

60% Prize Money At this stage, the bulk of the revenue made by ticket sales goes toward the prize money. The federal government does not take a percentage before the winners are announced.

6% Lottery Admin 6% Ticket Retailers Ticket retailers typically receive a bonus or commission for selling a winning Powerball ticket. The exact amount varies by state, but it can range from a few thousand dollars to several million dollars. These bonuses are given to incentivize retailers to promote lottery sales.

THE EDUCATION SLUSH FUND States with Lottery

States that did not adopt the lottery see a more steady and higher growth rate in spending toward education.

States without Lottery Lottery Adoption Year

INITIAL INCREASE, THEN SLOWER GROWTH After adopting a lottery, education spending does initially rise, often giving the public the impression of significant benefit. However, the growth rate in spending diminishes over time, effectively reducing long-term benefits to education. This decline occurs as lottery revenues are gradually used to replace, rather than supplement other funding sources, limiting the sustained impact on educational budgets.

Money Toward Education: States That Adopted the Lottery vs. Those That Didn’t

Education Spending

6

States see a jump and initial increase in funding immediately after lottery adoption.

“Revenues generated from lottery have very little or no impact on overall education spending," —Lucy Dadayan, Senior Policy Analyst, the Nelson A. Rockefeller Institute of Government

SUBSTITUTION, NOT SUPPLEMENTATION

In years following lottery adoption, states see a slower growth rate in spending toward education.

Lottery funds often substitute rather than add to general educational funds. Instead of increasing education budgets, states use lottery revenue to replace what would have been funded by other money sources, such as general tax revenue. This allows governments to reallocate existing tax revenue to other areas while presenting the lottery as a dedicated source of funding for education. The intended financial boost to schools often fails to materialize, leaving education budgets stagnant.

"The state legislators added the funding in to the budget, andgenerated then theyfrom takelottery it out."have very little or no “Revenues Source: Clotfelter & Cook, "Lotteries in the Real World," Public Finance Review

-5

0

5

10

Years Relative to Lottery Adoption

15

20

impact on overall education spending,"

—John O'Neil, Communications Director of the Virginia Education Association —Lucy Dadayan, senior policy analyst at the Nelson A. Rockefeller Institute of Government

Lotteries have a long history—they’ve been traced back to ancient Rome, and were used in Renaissance Europe to raise money for churches and government projects. These days, lotteries still claim to benefit public causes along with paying out winners.

LET’S SAY YOU WON A $10M PRIZE. YOU HAVE 2 OPTIONS Option 1.

1% Other

27% Education While each state can use their money gained from the lottery independently, most will put the majority of it toward funding for education. However, this is more often than not a front, as the revenue gets substituted rather than supplemented. The other 1% goes toward public beneficiaries which varies widely by state.

LUMP SUM Lump Sum Deduction The Lottery typically pays out around 60% of the total if taken as a lump sum.

Federal Tax The IRS requires a 24% federal tax withholding on lottery winnings.

Additional Federal Tax

24% Federal Government While the federal government doesn’t tax ticket sales directly, it ends up receiving a sizable portion of the total lottery revenue. After an automatic 24% tax on winners’ prizes (~15% of the total revenue), then an additional percentage of their winnings depending on the tax bracket, the federal government will end up with approximately 24% of the total lottery money.

Since the $6 million would push you into the highest federal tax bracket (37% as of 2024), you'd need to pay additional federal taxes beyond the 24%.

You keep

37.8%

You’ll have immediate access to a significant amount of cash, which can be invested for potentially higher returns if managed well.

$10M Total Jackpot

–$4M –$1.44M –780K $3.78M Total After Taxes

The majority of lottery winners opt for the lump sum payout, allowing them to receive the whole prize money upfront. However, for jackpot winners, the lump sum payout typically pushes them into the highest tax bracket, requiring them to pay up to 37% of their winnings in federal taxes. The combination of federal and state taxes means a substantial portion of the advertised jackpot never reaches the winner's pocket.

36% Winners After the division and distribution of lottery funds, the winners will take home approximately 36% of the total lottery revenue. Although this may not seem like much, it can account for tremendous jackpots and prizes of up to millions of dollars for the lucky winners.

Option 2.

ANNUITY Federal Tax

The IRS requires a 24% federal tax withholding on lottery winnings.

Additional Federal Tax

REDIRECTION OF FREED GENERAL REVENUE Money from the general fund, now freed up by lottery revenue, is often redirected to other areas. This money might support tax cuts, balance the budget, or accumulate as a surplus, which offers little additional value to education. Instead of increasing overall funding, the lottery revenue often creates a fiscal illusion, where the same dollars are recycled into different budgetary priorities.

"After a few years, lottery money earmarked for education tends to find its way into a state's general revenue pool."

—Patrick Pierce, Political Science Professor, St. Mary's College in Notre Dame

POLITICAL INCENTIVES Governors and lawmakers can publicly champion lotteries as a means of supporting critical sectors like education without imposing tax increases, making them a politically palatable option for generating revenue. This allows officials to highlight their commitment to public services while avoiding the backlash often associated with raising taxes. These outcomes appeal to the public and bolster political popularity by aligning with voter preferences for lower taxes and improved services.

If your total income places you in a higher tax bracket, you'd need to pay additional federal taxes beyond the 24% already withheld.

$10M Total Jackpot

–$80K/yr –$37K/yr x30

Yearly Payment Plan

An annuity typically spreads the winnings over 30 years.

You keep

65%

$6.5M Total After Taxes

net over 30 years, averaging $216,6666 per year

You’ll have a steady income flow and reduce the risk of depleting your winnings too quickly.

Very few lottery winners will choose the annuity option, sending them their money in installments over the course of usually 30 years. By spreading the payments over time, winners avoid receiving a lump sum that would immediately place them in the highest federal tax bracket. As a result, they pay lower taxes on each installment, retaining a larger portion of their total winnings over the long term.

"Despite financial advisors often recommending the annuity option, roughly 85% of winners take the lump sum. Many want immediate access to their money, even though they'll receive significantly less."

-Don Vaccaro, CEO of lottery analysis firm Money Management International

7

8

IS THERE A SMARTER SYSTEM AMERICA CAN LEARN FROM?

A LOOK AT EUROPE’S EUROMILLIONS

EuroMillions, Europe’s top transnational lottery, offers a jackpot system that’s both exciting and financially responsible. Unlike U.S. lotteries, where state revenue is funneled into education but often offsets deficits elsewhere, EuroMillions distributes funds to a range of public benefits, ensuring long-term impact. They also impose a cap on its jackpot, ensuring that excessive prize amounts are avoided.

Record Powerball Jackpot

$2,040,000,000,000

BIGGER ISN’T BETTER MORE WINNERS, MORE OFTEN

Like Powerball, EuroMillions prize pool includes multi-million dollar/euro jackpots and smaller prizes. However, their jackpot cap encourages more frequent prize distribution once it is hit, which allows for more winners and promotes responsible gaming standards.

WISER MONEY ALLOCATION EuroMillions ensures that excess funds, instead of continually inflating a single prize, are redistributed to other prize tiers or directed to public programs. With more revenue allocated to public initiatives, a capped system amplifies the societal benefits of the lottery.

2,000,000,000

$2.04B COULD FUND...

Arts, Culture, and Heritage

Environmental Projects

Social Welfare

Sports and Recreation

Healthcare and Medical

Education

EuroMillions

in 40,800 schools Sub-Saharan Africa

58.3 M 1,500,000,000

Powerball

4.9%

vaccinations for kids in developing countries

in the 204,000 houses developing world

Other

15%

10.8%

The ethics of awarding an individual with such a huge sum have been widely questioned— is there any good reason for one person to be made a billionaire?

34.3%

11.8%

85%

16.7% 21.6% 1,000,000,000

Euromillions’ stable and predictable funding has allowed Europe to rely on lottery income to fund social services and community projects consistently.

500,000,000

EuroMillions Jackpot Cap

$259,776,008 =€241,591,687.44

The Pudding

A Digital Publication https://pudding.cool @Thepudding

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0

The lack of a cap on Powerball jackpots encourages excessive gambling, disproportionately impacts low-income players, and exacerbates financial inequality and addiction risks.

PRSRT STD U.S. POSTAGE

PAID

SEATTLE, WA PERMIT NO. 1010

Treat the lottery as entertainment, not a path to wealth.

PLAY RESPONSIBLY.