A couple of years ago, when I first started this Blog, I wrote about a leadership lesson from the Lottery. I have taken a moment to update that posting to reflect more current statistics and information.
Okay, show of hands. How many of you are buying a ticket for this week’s Mega-Million Lottery that might bring a winner between $550 and $650 million? Unless you are holed-up in a cabin in northern Maine, I’m sure you have heard about this huge pot of money. Every media outlet is covering it, again. As I watch the hoopla and observe the record selling pace from a distance, I wonder, “why?” As I think about this question and why people feel incented to buy the tickets, I also wonder what this could teach me.
People Buy More Tickets as the Pot Grows. One of the things that fascinates me is hearing that millions of new people are buying Mega-Millions lottery ticket because the pot is growing. By “new people” I mean people who had not bought a ticket when the prior pool was around $300 million. Okay, so $300 million wasn’t enough, but $550 million, now that’s another story! The pot has grown because no one has won for 21 straight drawings since the odds were changed on October 1st.
Buyers know their odds of winning this lottery are small, but they don’t really know how small. Each drawing is the same – the odds are now 1 in 259 million (worse than the 1 in 176 million prior to October when the odds were changed to generate more money for government.) You are more than 4 times more likely to get killed by an asteroid strike than win the Lottery! Some people actually believe that as the money in the pot goes up, their odds of winning do too! Have you seen the lines of people waiting an hour to purchase tickets? I was just astonished to listen to a woman of average means say on television, “I think my time is now, I bought 100 tickets.” One thing is true, her odds of winning just increased 100 times.
Who Gets the Lottery’s Money? Most citizens know that governments (mostly state) are the real winners. Of the billions getting spent on this growing lottery, it is fair to say that over $1 billion will flow into state and federal coffers including the taxes on the winnings. In his article, “Could a Lottery Be the Answer to America’s Poor Savings Rate?” Stephen Dubner, of Freakonomics fame, writes that a lottery is often referred to as “a tax on stupid people.” This is because the lottery return is far worse than the regulated returns from casinos and Bingo halls. In his article, Dubner also introduces us to Prize-linked Savings (PLS) plans, which are very popular in Europe. These savings plans allow depositors to keep all of their weekly wages in a savings account, earn interest, and potentially win large money prizes in exchange for slightly lower interest rates. The depositors that participate act like a cooperative and the profits (interest and money prize payouts) only flow to the depositors, not the government. No wonder our state governments are reluctant to approve these!
A Lesson for Leaders. People really only buy lottery tickets for one reason – it’s fun! It’s fun to be in the action. It’s fun to talk about it with your friends. It’s fun to look forward to the drawing on Tuesday or Friday night. And it’s fun to dream – to dream of having real money and the pleasure that comes with it. This is the lesson for business leaders – remember the importance of having fun with your teams. When you do this effectively, your dreams for the team will come true.