Sunday, August 5, 2018

Powerball and wealth redistribution

Powerball is a multi-state lottery game. Since there are multiple states, the prizes are large. As I write this, the Grand Prize is $203 million. Now I know that the lottery is a tax on people who don't understand math. (I play by buying one $2 ticket, because I get hours of entertainment out of daydreaming what I would do if I won, and hay, it's only $2. Cheaper than the movies, or even a book.)

I was looking at the prizes and odds, and noticed something odd: California, even though they are playing the same game, awards different prizes. Check this out:

Match win win in California
5 numbers and powerball $203 million $203 million
5 numbers $2 million $212,409
4 numbers and powerball $50,000 $9,062
4 numbers $100 $399
3 numbers and powerball $100 $197
3 numbers $7 $7
2 numbers and powerball $7 $8
one number and powerball $4 $5
powerball $4 $4

As you can see, the prize structure takes money from  the larger winners and redistributes them to the smaller winners. Matching 5 numbers without the powerball, or 4 numbers with the powerball in California means that 85% to 95% of your winnings will be confiscated (by the time you pay taxes) and the majority of that money will be given to the "less fortunate" people who matched fewer numbers.

It's a metaphor for the entire state.

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