Looks like someone in my state won the Powerball last night...

[abrannan]

The lottery always makes me wonder... if every state has a lottery, and let's say the average jackpot is $15mil.  That's the low ones, right?  So, after taxes, that's probably $8mil.  That is $7mil every week in taxes to the state for providing basically a no effort service.  Ticket sellers don't get a cut, they volunteer to sell tickets and get a certain tiny commission on winning tickets.  Do they lease those machines?  They can't be a moneymaker, they're a customer draw at best.

So, that's a hella lot of tax revenue coming in from something that is practically a volunteer service.  Wonder where all those hundreds of millions go.  This doesn't even take into account multistate powerballs that run up into the hundred or more million range on a regular basis.

It's not quite like that.  If you win a $15mil jackpot, that's $15 mil if you take the 26 year annuity payoff.  If you take the "lump sum" amount, you're looking at a reduced $8-9mil, and then *if someone wins, and takes the lump sum* they pay about $3 million in taxes.  And there's not a winner every week.  Even on the multi-state lotteries.  Single state games by and large start at $1 million payoffs, and generally go up a few hundred thousand every non-jackpot drawing.  It would take more than a month of twice weekly drawings before a single state game hit $15mil.  So the state is only looking at that nice $3mil payout maybe once or twice in a year, maybe, but certainly not "every week" as you suggest.  And that $3 mil is the *total* taxes paid, including federal taxes, state taxes, local taxes, etc.  If it's split evenly between the three (and I know it's not) that's only $1 mil to the state, at most 4 times a year.  That's $4mil in taxes, which is a drop in the bucket on most state's tax revenue.  And even that's subject to the lottery winner not consulting a good attorney and accountant and doing everything in their power to prevent paying full tax on the amount. 

The big Multi-state games (Big game and powerball) are worse, because you're "competing" against the other dozen or so states in your area for a winning ticket holder.  And if your state has a winner, the winings are paid by your state only, out of a fund you keep from the earnings you get on ticket sale revenues from your state.  Two big winners in a year can bankrupt your state in payouts, even before you can collect that meager few percent back in taxes.  The only benefit to a multi-state game is that the higher jackpots do a better job of luring people to play, rather than cross state lines to buy tickets from a neighboring state that has a bigger jackpot. 

[ChadTower]

I'm pretty sure the MA MegaBucks gets up into multiple millions on a regular basis, but maybe that just used to be the case because I pay zero attention anymore.  I do concede that the one thing I didn't put into my formula is the division of the taxes between state and federal.  Of course, if the state only gets $1mil of that $7mil, that means the Federal gov't gets $6mil every time... now, multiply that by probably 30 states, and try to figure out where THAT hundred or two hundred million every couple weeks revenue stream goes.