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Comment by davidcalloway | Hacker News Reader

I get the sentiment but I've never really understood why this saying is so popular. A tax is a specific word with a real meaning. It is not voluntary. By this logic alcohol and cigarettes are themselves a tax on people with poor judgement, as well as many other products.

I myself have never understood the thrill payoff that must exist for lottery ticket buyers, but I cannot call it a tax.

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I call it a tax because it is a government organized/run operation with the objective of removing wealth from individuals for (ostensibly) the betterment of the citizenry as a whole.

My complaint is about the targeted nature of lotteries and the extremely poor investments they make for individuals who tend to already struggle in this area. This is compounded by the nature of the education system being operated primary by the same government.

The only reason the government is involved is because organized crime is who runs lotteries in the absence of the state. People would still gamble with black market lotteries.

Organized crime ran very small, very basic "numbers" games that are the equivalent to the low-profile "Pick 3" or "Quick 4" games most states run. Hundreds, maybe a few thousand dollars of prizes. No organized crime ring paid out multi-million dollar jackpots -- this is entirely the invention of government lotteries and the private administration companies that run them, like G-Tech. When 8-digit jackpots weren't enough to draw desired participation, states joined together (MegaMillions, Powerball) to create 9- and even 10-digit jackpots.

> The only reason the government is involved is because organized crime is who runs lotteries in the absence of the state.

This isn't really a concept that makes sense. Organized crime is a state. They serve the same functions, care about the same things, and draw legitimacy from the same sources.

The only reason organized crime is involved is because it's not legal and they're the only ones who do not legal at scale.

If it were legal normal business would do it, see for example weed or booze before and after prohibition.

Casinos everywhere object to being called organized crime.

Casinos don’t run lotteries, as least as far as I’m aware.

I was referring to the ‘numbers game’ racket: https://en.m.wikipedia.org/wiki/Numbers_game

> The only reason the government is involved is because organized crime is who runs lotteries in the absence of the state

No - the reason they do is because they can and it rakes in tons of money. Period.

The government doesn't make as much as the ticket printers and lottery machine manufacturers/owners. It's not about the money for the state. It's about the lobbyists who are now entrenched, same as virtually any US lottery.

> I myself have never understood the thrill payoff that must exist for lottery ticket buyers, but I cannot call it a tax.

The thrill is being able to dream for a week about what you'd do with the winnings.

For the vast majority of "the poor" who buy a ticket, that's what they're buying.

There are also a few who spend all their money they might have on lottery tickets, but those aren't much of the total number of people.

> The thrill is being able to dream for a week about what you'd do with the winnings.

I get the same thrill because I dream of finding the winning ticket on a sidewalk. Much cheaper, and the walk is good for me.

> There are also a few who spend all their money they might have on lottery tickets, but those aren't much of the total number of people.

Is there any evidence of that? I can recall reading that alcohol consumption, for example, has a Pareto distribution skewing in favor of so-called "heavy users" (whom most of us would refer to as alcoholics). I'd imagine a lot of vice industries are similar. Is there any evidence to suggest lottery ticket purchases are distributed across a large number of infrequent, low-volume purchasers?

I don't have numbers but many years ago I worked for a lotteries company and I know one person had the responsibility (among other things) of phoning up big spenders to check if they were exceeding their means. I remember one huge spender being an off-shore syndicate.

The company (and most lotto companies would be the same I'd guess) had little interest in taking money from problem gamblers too because in most cases their business is a monopoly so they're making good money anyway, and enabling problem gamblers would almost certainly be a breach of their license, so they'd be up for big fines (or in an extremely unlikely scenario, loss of their license). Contrast that with horse and sports betting companies where there's lots of competition and slim margins, so if you want to make money you need to take a bit from the problem gamblers.

That said, it probably is a Pareto distribution, but skewed: maybe 95% low/normal spenders, 4% syndicates/big spenders with means, 1% problem gamblers.

You see some people now and then scratching tens of tickets, but the "pick the numbers" games are too slow for them.

Most of the people who are addicted want a quick hit, and so end up at a casino.

> The thrill is being able to dream for a week about what you'd do with the winnings.

Exactly. and as bad as the odds are, it's still the best chance they have to ever be rich.

I think it's not meant as a literal tax. The idea is that "poor" (I've always understood it as a tax on the poor) people don't understand the math enough to know how minuscule the chances are of winning. Because they don't know, they think buying lottery tickets is a financially good idea and that's why they do it.

I've always considered it a Freudian slip because the people who see gambling as screwing poor people out of their money are mostly the same people who are in favor of boutique taxes and government carrot and stick type stuff.

The same people screaming to legalize weed because enforcement doesn't work. If I could change the lottery I would remove the inflated annuity value vs lump sum. And incorporate the tax into it too, so the jackpot amount is, in fact, the amount the winner gets deposited. I would also like to see a limit on the odds. The current 175M-1 or whatever is just obnoxious. Maybe 50m-1 or a bit higher. I once approximated the chances by expressing it as choosing one particular house, in a major US city. And from there, choosing one specific power outlet in one room. What's worse is the ticket prices is increasing soon to $5 from $2. So we're going to see more of these multi billion dollar jackpots that the media love to play up.

As far as I am familiar, considering the actual cash flows, state lotteries do very strongly tend toward screwing poor people out of their money. Do you have some evidence otherwise?

'Tax' like most words, does not in fact have a real well defined meaning.

Remember how Pluto stopped being a planet because 'planet' went from just a word to a technical term with a well defined definition? Most words don't have that.

So, tax is any money given to the government. Income tax, sales tax, fees for registering cars, admittance to national parks, etc etc. Anytime the government collects any money that is a tax.

To paraphrase a great statesman---a lottery is just a tax with extra steps.

What if the government was the sole legal distributor of cigarettes, advertised them, and promised to fund schools with the revenue?

I call it passive taxation, because the state collects funds without any effort.

I don't get the winning thrill either, but several gambling addicts I used to work with described it as a feeling like none other. When I offered to go with them, as support to get help, they weren't interested in that feeling.

Gambling is the only vice which doesn't require external input. You can make a bet out of anything.

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