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“The lottery is a tax on people who are bad at math.” -Bill Nye, former PBS “Science Guy”

It’s a principle that applies to gambling in many forms, from the lottery to casinos to the new electronic pull-tabs and bingo that are supposed to fund the new Vikings stadium. Gambling for recreation and with knowledge of the math involved is one thing, but the use of gambling as a funding mechanism relies on a lack of knowledge on the part of the gambler. It’s regrettable that we take advantage of that.

The “Expected Value” (or EV) of anything you pay for is the amount you can expect, on average, in return. If you give me $1 and I give you 50 cents, the EV of your $1 is 50 cents. You would be unlikely to make that deal repeatedly. If you gave me $1 and I flipped a coin, giving you $1 or nothing based on the outcome, the EV is also 50 cents. Over time your return will be very close to the EV.

With pull-tabs the best advertised payout is 75 cents on the dollar, and usually less. For scratch-off lottery games it is about 55 cents. For Powerball, at the minimum jackpot of $40 million, the EV is just 28 cents. Think of it as handing the clerk $1 and getting 28 cents back, because that is actually what you are doing.

Now, Powerball and some other games have “progressive” jackpots, which grow if no one wins. So the EV grows when no one wins. But for the EV of your $1 to be $1, the jackpot would have to be over $450 million expressed as an annuity, which is how it is advertised. Add to that the expected tax burden. The Powerball jackpot has never been near that.

I don’t mean to get bogged down in minutiae, but I think it’s important to understand the numbers. I encourage you to check my calculations. Where choices could be made, I have assumed the most favorable to the gambler.

This is how we are funding our state. We are taking advantage of the lack of knowledge of citizens. Statistics show that it is disproportionally the less-educated who gamble, making it a terribly regressive funding source. Some people gamble for recreation and I have no issue with that. But many are taking a chance based on false hope or are addicted to the feeling of gambling. I suspect some justify it by believing they are benefiting the Vikings, the environment or a charity. That seems particularly deceptive and something I’m just not morally comfortable with.

We publicize the good projects attached to gambling, encourage people to play, and close with a toll-free number that we can call if it gets to be a problem. In other words, we want your money, we need your money, right up to the point your addiction takes over.

We would be better off as a state if we were honest about our state’s finances. As individuals we would be better off saving our money.