How the Money Rolls In: $3.86 Billion--an Average of $192 Per Californian

Since the California State Lottery began in October, 1985, players have spent more than $3.86 billion on lottery tickets, according to the lottery’s Dec. 14 accounting. That’s an average of $192.44 for every adult in the state.

Who’s spending all that money?

A demographic study of lottery players mandated by the Legislature was delivered last February. In it, Maritz Marketing Research analyzed interviews of 2,545 randomly selected Californians and found that:

Seven of every 10 adults in California had played a lottery instant-winner game, in which players scratch off a coating on the ticket to see whether and how much they have won. Winning $500 qualifies the ticket holder to be in the drawing of Big Spin contestants. The biggest Big Spin prize won so far is $15.22 million by Paul Spencer of Saratoga.

By contrast, only one in four adults had played Lotto 6/49, in which players select six numbers and win if some or all of those numbers are drawn later. The biggest Lotto prize awarded up to the Dec. 14 accounting was $17.9 million, won by Gordon Pivar of Oceanside. (On Dec. 16, Carlos Olvera of Compton broke the record by winning $25.14 million.)

While the sale of scratch-off lottery tickets per capita is fairly uniform statewide, the highest per-capita sales of Lotto tickets are in the state’s South Coast region, which includes Orange County.

Lotto players are the more persistent players. When interviewed, three of every four had bought a Lotto ticket within the previous week, compared to only one in three among scratch-off players.

About 70% of lottery players are white, 16% Latino, 6% black and 4% Asian.

The most avid lottery players are Latinos. Nearly four of every five Latino adults have bought a ticket. And they buy more per player than any other ethnic group--a median of 5.8 tickets in four weeks compared to 3.4 for all lottery players.

Asians and blacks play the lottery at about the average rate, but they are the most avid Lotto players. The average Asian player bought 10 Lotto tickets a month, and the average black player bought eight.

About 80% of blue-collar workers have played the lottery, while only 34% of the non-employed (homemakers, students and retirees) have played. More than 75% of middle- and upper-income households have played the lottery.

By age, the most enthusiastic lottery players are 35 and younger, and they favor the scratch-off games.

The education, sex and family status of lottery players closely approximates the state’s general population.

These players’ expenditures have made the California State Lottery the largest of those held in 22 states and the District of Columbia. During the excitement of its first days, the California Lottery sold between 9 million and 10 million tickets a day, about 7,000 tickets each minute, and sold out in 43 days.

The lottery is midway through its third fiscal year. During the first two, it paid out $1.58 billion in prize money (not including $5.35 million in unclaimed prizes) and spent $183.51 million in operating expenses. It paid $1.2 billion into the state education fund, which is somewhat more than the 34% of total lottery ticket sales mandated by law.

Any further questions?

Is the lottery dangerous?

A Apparently it can be. Every contestant participating in the Big Spin is required to sign a waiver acknowledging that he has been informed “of the hazards and possible consequences to my health.” The implied hazard is the excitement of winning and its effect on faint hearts. If your heart can’t take it, you may appoint a stand-in.

Is the lottery corrupt?

A Moral questions aside, safeguards have been established to ensure honest administration. Tickets are printed at a speed too fast to read. The tickets are foil-backed to ward off X-rays, and they contain protection codes to verify their authenticity if they are winners. The computer information that identifies winning tickets is dispersed so that no one person has all the necessary information. All drawings are conducted in public by people who are not lottery employees, and a video record of each drawing is preserved. Law forbids lottery officials, employees and their families from winning any lottery prize.

Are lottery winnings tax-free?

A Sort of. If you live in California, you don’t pay state or local income tax on lottery winnings. But if you live in another state, that state will tax the winnings. And in all cases, the federal government taxes winnings. By law, if you win $5,000 or more, 20% is withheld for income taxes--30% if you’re not a California resident. Any prize of $600 or more is reported to the Internal Revenue Service. And if you haven’t kept up with your alimony payments or child support or you owe back taxes or fines, those amounts will be deducted from winnings before you get your check.

What are the odds of winning the top prizes?

A According to lottery officials, the chances of getting all six Lotto numbers on one entry are 1 in 13,983,816. The chances of a scratch-off ticket being the instant-winner top prize of $25,000 are 1 in 3,604,651. The chances on a scratch-off ticket being worth $500 and then being drawn for the Big Spin are about 1 in 3.5 million. Chances of then spinning the grand prize are 1 in 50.