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How to Play the Lottery in Florida and NEVER Lose – Gregory Eisenberg – Medium

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Proposing a “No-Lose Lottery” in Florida

Imagine a lottery that you couldn’t lose.

What a concept? You could win; you could break even; but you couldn’t lose. It’s possible, and here’s how: traditionally, if you have a savings account, you accrue a very small amount of interest from the bank (the average interest rate in 2017 was 0.194%). What if rather than this small amount of money going back to you, it went into a pot — along with the interest from every other participating account holder. For every $1, or $5, or $10 that you deposit into your savings account, you would receive an entry into the contest — a contest in which every entry has an equal chance of winning the pot. It would be essentially the same cost to participate as the current lottery — except if you don’t win, you never lost the cost of your ticket. Hypothetically, you could put $100 into this lottery with a slight chance of winning, and regardless walk away with $100 in personal savings.

We’re allowed to do this.

A bipartisan bill, called the American Savings Promotion Act, passed the House (Republican majority) on a voice vote and the Senate (Democrat majority) unanimously before being signed into law by the President in 2014. Essentially this opened up state-level legislation allowing banks and other financial institutions to open “prize-linked savings accounts,” which are savings accounts that reward the account holder with an equal chance of winning designated prizes “in which the sole consideration required for a chance of winning is obtained by the deposit of a specified amount of money in a savings account or program.”

The concept is proven.

Twenty-five states allow banks and credit unions to offer prize-linked savings accounts, as well as four states that allow just credit unions to do so. In Michigan’s pilot program, 56% of the participants opened their first savings account because of the program, and after a year those 2,824 accounts had an average account balance of $588. 44% of the participants had a household income of under $40,000 and those 2,162 accounts had an average account balance of $634 after a year in the program. You can read here that 40% of Americans can’t even afford a $400 emergency expense, so allowing these types of accounts just makes sense.

Then why don’t more States do it? The traditional argument is that state lotteries bring in money for education (like in Florida), and prize-linked savings accounts would compete with those traditional lotteries. This year, the Florida Lottery contributed 27 cents per dollar spent on lottery products to education, but we would be lying to ourselves if we said that was why we play. Lou DiBenigno, former Florida Lottery Secretary, told Freakonomics in their podcast:

I think people — Floridians in general — are players. They like the idea that the money they spend on the lottery, that a proportion of it and, in this case, a significant portion does go to fund education. But I’m the first to say that they don’t play the lottery by-and-large to help fund education in Florida. People play the lottery to win. They like the prizes, they like the excitement, they like the fun, the possibility of winning — you know, sometimes $10, $20, $50 and sometimes many multi, multi millions of dollars. I think the funding to education is ancillary. It’s an extra bonus that the public views the lottery as a different and unique and fun way to be able to fund at least some of things that our education system needs.

Our Legislature can get this done.

In today’s polarizing political climate, we are longing for bipartisan legislation. Especially legislation that helps educate and prepare low income residents. Lottery players in Florida spend an extra $6–10 per convenience store visit than non-lottery players, and this difference adds up over the year. We need our Florida State Representatives and Senators to make this a priority in 2019. Let’s create the incentive to save for the future, to be prepared for what is to come, and to invest in our local financial institutions — and maybe we’ll hit the jackpot.

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