The idiot tax

Apparently the price of a standard lottery ticket is doubling from £1 to £2. According to some of the faces on breakfast news this is motivated solely by greed on the part of Camelot. I feel sorry for the people who, in these straitened economic times, have this extra money taken off them every week at gunpoint. It must be awful! As commuting fares, the price of food, fuel costs and other daily expenditure continues to rise, the last thing these poor souls need is yet another mandatory outgoing getting jacked up, by 100% no less!

<Pause for comic effect>

Oh! It’s not mandatory? You don’t have to pay this? Hmmm…

Well, it’s still a kick in the pants isn’t it? I mean if you’ve got used to shelling out £1 each week for a minimum winning of £10 and then your outlay increases to £2 your ROI plummets from 900% to 400%. Still in this climate, a 400% return isn’t too shabby. That beats current ISA rates by abut 397.25%. It’s still looking like a pretty good deal.

<Second pause for comic effect.>

Oh! That’s not an accurate picture of how this investment works? You’re not guaranteed to get that minimum £10 prize? In fact more often than not you don’t get anything at all?

I rather like the description of the lottery as an idiot tax. I have paid the lottery on a couple of occasions, but not for years and years. A few months ago Terry bought a scratch card to make up the minimum spend in a newsagents so he could pay by credit card. He bought it home, and to our delight we won our £1 stake back again. The next day I took our winning scratch card back to the newsagent and asked for my spoils. The cashier was happy to hand over my pound coin but commented that most people chose to buy another scratchcard with the proceeds of any successful prior cards, thereby vastly increasing the likelihood of the net gain from the venture ending up at zero. This doesn’t sound like sensible fiscal management to me.

I’m not much of a gambler. I’m pretty miserly when it comes to money, and I genuinely don’t get the appeal of chucking money away when the odds of getting something back are so heavily not in your favour. I don’t really understand people being angry about this. You don’t like the idea of spending £2 on a ticket which probably won’t win anything anyway? Don’t then. Buy yourself an ice cream instead. Put it in a piggy bank and save up to buy a new video game. Stick it in a charity bucket. There are plenty of better uses for two quid.

(As an aside this morning I listened to the Shadow Minister for Sport [and as an aside within an aside what the hell is the lottery doing under the remit of sports anyway?!] saying he was concerned that the amount of lottery money that would be available for ‘good causes’ would drop if the ticket increase put punters off. This seems kind of twisted to me. Camelot gives some money to good causes from the proceeds of ticket sales, but they are also paying Lottery Duty to the government, a Sales Commission to the retailer, their own operating costs etc. Playing the lottery is a really inefficient way of giving money to good causes.)

A rather more politically charged description I’ve heard for the National Lottery is the Poor Tax.

At the start of the year The Campaign for Fairer Gambling published a report indicating there is evidence that unscrupulous bookmakers are deliberately targeting poor areas, particularly regarding the installation of the much maligned Fixed Odds Betting Terminals, dubbed the ‘Crack Cocaine’ of the gambling world. Unsurprisingly the gambling industry vehemently objects to this characterisation. I haven’t read the report, I don’t know how accurate it is, I don’t know what if any bias has gone unpublished.

However the handy thing about industry expansion is that it gives you a lovely big data set to work with. On a small level you can argue the toss about whether a couple of extra bookies cropping up on the bad side of town represents a trend. But if you get enough data from enough different areas then the numbers start to speak for themselves.

2013 is the International Year of Statistics. Understanding statistics will help determine whether the gambling industry is as morally bankrupt as it’s made out to be. It also helps people to understand probability. As the Monty Hall Problem shows, humans typically struggle to understand probability. Our intuitions about risk, useful perhaps 250,000 years ago when we were running away from lions on the savannah, are frequently mathematically unsound. Perhaps if we understood how probability works we wouldn’t buy into the gambling industry in the first place.

One thought on “The idiot tax

  1. Owen Blacker says:

    I think you’re overlooking the power of aspiration and desperation. Logically, almost all people who play the lottery know that they probably won’t win anything. But if they don’t play, they definitely won’t win anything.

    Yes, there are problems with the public understanding of probability, but if you want a good exemplar of that, the priority we put on antiterrorism measures makes a far better case. The lottery — and gambling more generally — preys on the desperation of the poor to find a way out of their situation, not on their ignorance of the odds.

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