US Lottery

Introduction

Why Lotteries Are a Poor Gamble – An In-Depth Lottery Analysis The lottery stands out as one of the most perplexing forms of gambling available. If you’re here, it’s likely because you’re seeking the best odds for your wagers, and unfortunately, the lottery doesn’t offer that.

This report aims to answer the question: Just how unfavorable is the lottery? We will conduct a comprehensive state-by-state analysis of typical lottery games’ return to players. Additionally, we will examine the impact of Covid-19 on lottery revenues for the most recent year up to this point. To ensure fair comparisons, we will use lottery reports up to the year 2019 whenever possible.

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Methodology and Key Points

Once again, our objective is to achieve a consistent apples-to-apples comparison; however, due to differing fiscal years among states, we will aim to utilize the most recent year ending no later than December 2019 for available data.

Highlights may include specific return-to-player rates for individual instant ticket denominations, although these are infrequently reported. Therefore, the final table will focus on overall totals for instant and drawing tickets, their respective return-to-player percentages, and the average player loss for each lottery category.

A notable trend to observe is that states with commercial casinos often exhibit lower losses per resident compared to states solely reliant on lotteries. This trend is particularly evident in states where casinos are easily accessible to a majority of residents geographically.

States with Limited Video Lottery, like West Virginia, will have their loss per resident noted with an asterisk in the table if it includes this aspect. Additionally, a separate note will highlight the loss per resident solely considering instant and drawing tickets.

Alabama

Alabama has historically been one of the few states without a state lottery. However, recent legislative developments suggest this could change. Bills have passed in both the house and senate, proposing a constitutional amendment that would allow voters to decide on implementing a state lottery and limited casino gambling. Any commercial gambling ventures would also extend to tribal locations within the state. Stay tuned for further updates and a potential vote in 2021.

Alaska

Alaska is another state without a state lottery, aside from a limited charitable lottery resembling a weekly 50/50 raffle. Legal gambling in Alaska is mostly limited to charitable gaming and tribal casinos offering bingo and pull tabs. Tribes generally have the right to offer any gambling permitted by state law. Notably, Alaska lacks significant lottery revenues.

Arizona

Despite challenges posed by the Covid-19 pandemic, Arizona’s lottery had record-breaking fiscal years in both 2019 and 2020. In 2019, Arizona exceeded a billion dollars in lottery sales for the first time. However, residents typically lose about 50% of their money to the lottery, as mandated by the state’s minimum return-to-player requirement of 50%. This is often balanced by better returns from instant games compared to national lotteries like Powerball and Mega Millions.

Arkansas

Arkansas operates an annual lottery with limited other forms of gambling. The state’s Fiscal Year 2019 Lottery Annual Report provides detailed insights.

Arkansas segregates instant and drawing tickets by sales and revenue, allowing for a comprehensive return-to-player comparison. The state also participates in multi-state lottery games like Mega Millions, Powerball, and Lucky for Life, which typically offer lower returns compared to standard drawing games such as Pick 3 (which has a 49.9% return).

In Fiscal Year 2019, total lottery ticket sales reached $515,493,507, with $407,825,514 (79.11%) from instant ticket sales and $107,667,993 (20.89%) from drawing tickets.

Prizes paid out amounted to $293,695,992 for instant tickets, resulting in a return to player of 72.02%—relatively good by state lottery standards. For drawing games, $56,240,230 was paid out to players, yielding a return to player of 52.23%, which is typical for state lotteries.

California

For California, we’ll refer to the Fiscal Year Ended June 30, 2019 Annual Report available here.

California participates in multi-state lotteries along with state drawing games and Instant Games. The state offers a wide range of gambling options, nearly every form of physical gambling is legal except for greyhound racing.

Colorado

Colorado requires a minimum return to player of 50% for overall lottery games, but individual multi-state games like Powerball and Mega Millions may have lower returns as long as the overall lottery meets or exceeds 50%. Instant tickets in Colorado have a wide price range from $1 to $50.

Connecticut

The 2019 Annual Report for the Connecticut State Lottery is accessible here.

Connecticut participates in multi-state linked jackpot lottery games with lower returns. Instant ticket prices ranged from $1 to $30 in the relevant fiscal year.

Delaware

Delaware’s State Lottery participates in multi-state drawings like Powerball and Mega Millions. They also oversee casino operations and a Sports Lottery. The annual report can be found here.

Florida

The Fiscal Year Ended June, 2019 Annual Report for the Florida State Lottery can be viewed here.

Florida has diverse gambling options, including Native American casinos and lenient social and charitable gambling laws. The state’s demographics and tourism influence its lottery performance.

Georgia

Georgia’s Fiscal Year audit for the period ending June, 2019 is available here.

Georgia has historically been restrictive with legalized gambling, but is gradually expanding. While lacking commercial casinos, Georgia recognizes certain skill-based games like Banilla Games and Pace-O-Matic machines as legal. The state lottery’s revenue for FY 2019 was $4.776 billion with total prize payouts of $2.12 billion, resulting in a $2.656 billion loss. With an estimated population of 10.62 million, this equates to a loss of approximately $250.09 per resident.

Hawaii

Hawaii prohibits all forms of gambling, including lotteries, except for outbound passengers.

Idaho

Idaho operates its own lottery participating in multi-state games. The state has limited gambling options beyond the lottery. In FY 2019, Idaho lottery sales totaled $219.1 million, with notable instant ticket returns at 72.25%.

Illinois

Illinois has an expansive gambling landscape, including riverboat and commercial casinos. The state lottery’s 2019 annual report lacks specific game type breakdowns, but overall lottery games had a return to player of 64.12%, resulting in a loss per resident of about $84.25.

Indiana

Indiana embraces various forms of gambling, including commercial casinos. The state lottery’s FY 2019 report showed sales of $1.347 billion, with instant games returning 68.90% to players. Losses per resident totaled around $72.45.

Iowa

Iowa offers diverse gambling options, with riverboat and tribal casinos. The state’s lottery report for 2019 revealed total losses per resident of about $47.66, with instant ticket returns averaging around 66.59%.

Kansas

Kansas, although not a major gambling state, has a lottery with limited resident losses. In 2019, total losses per resident amounted to approximately $42.09, with an overall return to player of about 58.48%.

Kentucky

Kentucky relies heavily on its state lottery due to limited gambling options. The FY 2020 lottery report revealed a focus on instant tickets and drawing games, with iLottery Instant Play Games included under drawing games.