How the Irish Lotto Started

The First Irish Lotto Draw was in April 1988

How it’s Going

  • There have been approximately 3,300 draws since then creating over 800 millionaires since the first €1m + Jackpot was won in 1999.
  • 380,000 people play online.
  • 700,000 have downloaded the Lotto App.
  • Estimates suggest anything from 1.4 million to 2 million play each week.

Lotto Stats

  • Sales in 2020 €918.9m – that’s €17.7m a week!!!
  • Prizes won in 2020 €528.9m
  • Good causes in 2020 €253.6m (approx. 30% of sales)
  • Leaving for €136.4m for salaries, expenses, marketing etc.
  • Most popular numbers drawn are 2,38,12,10,6,27

Why is it in the News so Much lately?

At the time of writing, the Irish Lotto Jackpot hasn’t been won in 6 months (approximately 60 draws with no winner). The Jackpot is capped at a very enticing €19m

Wow €19m Euro??  So what are my chances of Winning?

Let’s start with Greece. What you may ask does that have to do with the Lotto? Well not a lot really but conveniently it has a population of approximately 10.7 million. This is relevant because your chances of winning the Irish lotto are currently 10.7 million to 1.

So, let’s say we give you a random Greek citizen’s name (we’ll call him Alexander the Great). He lives somewhere in Greece amongst its 10.7 million inhabitants.

You have to go to Greece and knock on any door in the entire country…. The chances that you find Alexander behind the door you choose to knock on are approximately the same as your chances of winning the lottery. (In fact, they are higher as there will be far less than 10.7 million homes to house 10.7 million people but you get the idea). There is pretty much no chance you would knock on a random door in the entire country of Greece and be greeted by our Alexander on the far side.

That seems a bit far-fetched, give me something else to work with?

Croke Park holds 80,000 people when full…. Garth would have to play 134 consecutive nights in Croke park to 80k people each time to play to 10.7 million people!

The Lotto has independent probability for each draw… i.e., it’s like tossing a coin, the odds are always the same regardless of the previous result. Toss a coin and its always 50/50 heads or tails. Play the lotto the chances are always 10.7 million to 1. Frequency of play does not increase your chances but increasing the number of tickets in a given draw does. Better to buy more tickets per draw and play less frequently!

Things that are more likely to happen to you than winning the lotto

  • Being killed by a shark 3.7 million to 1
  • Winning an Olympic gold medal 662,000 to 1
  • Dying from a bee sting 60,000 to 1
  • Being dealt a Royal flush in poker 649,740 to 1
  • You are also more likely to die from a snake bite, a lightning strike or a plane crash than to win the Lotto

So, what is the point in playing the lotto at all??

As long as you play with money you can afford to lose and realise that you are very unlikely to ever win then its fine.

The harsh reality is that the dream doesn’t come true for the vast majority of people who play and even when it does in a large percentage of cases it can end up being a nightmare. We have all heard the stories and watched the documentaries of how it doesn’t always work out for the best for those who have won the jackpot.

But someone has to win and if you are not in you can’t win!

Yes, for sure the jackpot will be won eventually but for every winner there has to be a loser and in the case of the Lottery there are millions of losers for every winner (remember that 17.7m a week being spent on the lotto… it’s not all going to good causes (30% only))

If we all go into a big room and throw all our money in the air, some people will catch more than they threw up and most will gather up less.

Should we invest the money instead and rely on investment growth rather than luck??

Well, let’s consider an avid lotto player playing twice a week with quick pick and maybe the odd scratch card and daily millions, euro millions, etc. and not hard to see someone spending 20-30 euro per week chasing the big one.

That’s €1-1.5k per year …. What if you could invest that for say 20 years instead of playing the lotto??

Of course, there is also risk associated with investing. A quick google search tells us that the 50-year return on the US S&P 500 is 10.83 % per annum.

If we assume a monthly spend of €100 (€1200 per annum) and invested it  in an annual S&P tracker over a 20-year period instead of playing the lotto with an average return of 10.83%, we would have approximately €75k at the end of the period.

A 5% return would give us c. €41,103. In both instances we would likely be well ahead of the majority of lotto players

Now, say you are a higher rate tax payer and you decided to invest the €100 euro per month in a pension instead and avail of the tax relief available, you could actually put €167 a month into your pension for the same €100 net cost.

And because we are talking about pension now, let’s say we took a 40-year term from first job age 21 to age 61 (or age 25-65) …. €167 euro a month at 10% per annum for 40 years would grow to €1,056,121. You could retire a millionaire…. A 5% per annum return would leave you with €254,845.

Of course, try telling all of this to whoever eventually does win the €19m jackpot! But the most important thing the winner (or winners) should do is meet with a good financial adviser and make sure they don’t blow it all!

Conclusions

  • The vast majority of us will never win the lotto
  • We are more likely to win an Olympic gold medal or be killed by a shark!
  • Play it for fun only
  • Never play at the expense of necessities
  • Consider a savings plan or increasing your pension instead
  • If you are lucky enough to win, engage the services of a Professional Financial Planner!

Brian Trainor BSc QFA CFP® is a Director of Wealthwise Financial Planning, Block C, Hartley Business Park, Carrick on Shannon, www.wealthwise.ie. Wealthwise Financial Ltd T/A Wealthwise Financial Planning is Regulated by the central Bank of Ireland. All details and views contained within this article are for informational purposes only and does not constitute advice. Wealthwise Financial Planning makes no representations as to the accuracy, completeness or suitability of any information and will not be liable for any errors, omissions or any losses arising from its use.