Millions of people play the lottery every day. Is it just a harmless game, or something more insidious?
Welcome to Skeptical Sunday, a special edition of The Jordan Harbinger Show where Jordan and fact-checker, comedian, and podcast host David C. Smalley break down a topic that you may have never thought about, open things up, and debunk common misconceptions.
On This Week’s Skeptical Sunday, We Discuss:
- How much do people really spend on lottery tickets, and who does most of the buying?
- Winning an Oscar, being struck by lightning, or becoming an astronaut are just three things you’re more likely to do than win the lottery.
- What do governments do with the money brought in by lottery sales? At least some of it is put to good use, right?
- Why winning the lottery isn’t a guaranteed way to fulfill your dreams — and is more likely to turn your life into a nightmare.
- Why you’re better off using the money you’d spend on lottery tickets on almost anything else.
- Connect with Jordan on Twitter, on Instagram, and on YouTube. If you have something you’d like us to tackle here on Skeptical Sunday, drop Jordan a line at firstname.lastname@example.org and let him know!
- Connect with David at his website, on Twitter, on Instagram, on TikTok, and on YouTube, and make sure to check out The David C. Smalley Podcast here or wherever you enjoy listening to fine podcasts! If you like to get out of your house and catch live comedy, keep an eye on David’s tour dates here and text David directly at (424) 306-0798 for tickets when he comes to your town!
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Please Scroll Down for Featured Resources and Transcript!
Please note that some of the links on this page (books, movies, music, etc.) lead to affiliate programs for which The Jordan Harbinger Show receives compensation. It’s just one of the ways we keep the lights on around here. Thank you for your support!
This Episode Is Sponsored By:
- Apartments.com: Learn more at apartments.com
- Progressive: Get a free online quote at progressive.com
Miss our two-part conversation with former gangster, pimp, and mob enforcer Mickey Royal? Get caught up by starting with episode 548: Mickey Royal | A Pimp’s Secrets of Mind Manipulation Part One here!
Resources from This Episode:
- Lotteries: America’s $70 Billion Shame | The Atlantic
- Which States’ Residents Spend the Most on the Lottery? | LendEDU
- Why People Play the Lottery Despite Terrible Odds | Casino.org Blog
- Stefan Mandel: The Man Who Hacked the Lottery and Won 14 Times | ATI
- Hey, Bill Nye! Is Playing the Lottery Rational? | Big Think
- The Lottery Changed My Life | IMDb
- The Tragic Stories of the Lottery’s Unluckiest Winners | Time
- Do Lotteries Really Benefit Public Schools? The Answer is Hazy | Public School Review
- Audit: California Lottery Owes Public Education $36 Million | CBS Los Angeles
693: Lottery | Skeptical Sunday
[00:00:00] Jordan Harbinger: Welcome to the show. I'm Jordan Harbinger, and this is Skeptical Sunday, a special edition of The Jordan Harbinger Show, where fact-checker and comedian David C. Smalley and I break down a topic you may have never thought about, open things up and debunk common misconceptions — topics such as why the Olympics are kind of a sham, why expiration dates are nonsense, why tipping makes no sense, ear candling, banned foods, toothpaste, chemtrails, and a whole lot more.
[00:00:27] Normally, on The Jordan Harbinger Show, we decode the stories, secrets, and skills of the world's most fascinating people and turn their wisdom into practical advice that you can use to impact your own life and those around you. We normally have long-form interviews and conversations with a variety of incredible people from spies to CEOs, athletes, authors, thinkers, and performers.
[00:00:46] If you're new to the show, or you want to tell your friends about it, our episode starter packs are a great place to begin. These are collections of our favorite episodes, organized by popular topic to help new listeners get a taste of everything that we do here on the show — topics like persuasion and influence, negotiation and communication, China, North Korea, failure and resilience, crime and cults, and more. Just visit jordanharbinger.com/start or take a look in your Spotify app to get started.
[00:01:12] Today, on Skeptical Sunday, millions of people play the lottery every day, but is it a good idea? Is it just a harmless game or is something more insidious going on here? Comedian David C. Smalley is with me once again on this Skeptical Sunday to make us all feel very uncomfortable about something we either love to do or if you're like me, try to ignore.
[00:01:32] David C. Smalley: Hey Jordan. Uh, yeah, man, most adults have played a lottery at some point. There are only five states that do not have the lottery in the US by the way. Alaska, because I'm assuming there's just not enough people. Hawaii, because according to their debates, they don't want those kinds of people to visit—
[00:01:50] Jordan Harbinger: Wait, they don't want people who play the lottery to be anywhere near Hawaii?
[00:01:54] David C. Smalley: Something like that, yeah. Those kinds of people, it's literally word for word from an actual debate amongst the legislatures.
[00:02:00] Jordan Harbinger: Like anyone's going to fly to Hawaii and then buy lottery tickets. It's going to be locals, but okay.
[00:02:05] David C. Smalley: Maybe so. Utah for very obvious Mormon reasons.
[00:02:08] Jordan Harbinger: Okay.
[00:02:09] David C. Smalley: Yes, the state constitution bans all games of chance. So, I guess if it's not rigged by Joseph Smith, you can't play it in Utah.
[00:02:16] Jordan Harbinger: Okay.
[00:02:16] David C. Smalley: Alabama for non-Mormon, but still very much Jesus reasons. And then oddly enough, Nevada, because if you're going to be homeless, the casinos should cause it.
[00:02:26] Jordan Harbinger: Right. Like if you're going to be wasting money on something, it better be in this venue.
[00:02:30] David C. Smalley: They don't want the competition, man.
[00:02:31] Jordan Harbinger: That's right. They don't want the competition. No, that totally makes sense. All of those check out and are very unsurprising. Although I would say Alaska, you'd think would have a lottery. But you may be right, it may just be too dang hard to assemble a jackpot when it's this sparse population, although it could just have a lower jackpot. I don't know.
[00:02:49] So how much are people really spending on lottery tickets? I see the Powerball and it's always like $365 million.
[00:02:55] David C. Smalley: Yeah.
[00:02:56] Jordan Harbinger: That's a lot of people. That's a lot of tickets.
[00:02:58] David C. Smalley: Well, Americans spend over $80 billion every year on the lottery. That is $228 per American and not all Americans play.
[00:03:08] Jordan Harbinger: No.
[00:03:08] David C. Smalley: If you just count the adults, it would be like $400 per person and not all adults play. So the people who do spend quite the chunk of chains on chasing those millions and the overwhelming majority — of course, spoiler alert — do not win. They just keep tossing their money down the drain.
[00:03:26] Jordan Harbinger: Ah, I can hear the comments now, "But David, it helps the schools." Because when I was a kid that was the idea behind the lottery, right? It was supposed to fix funding for the schools.
[00:03:34] David C. Smalley: Yeah, it kind of does. So is it all bad still? Still yes. Uh, but I'll address that in a bit. I'll get to the school thing, I promise.
[00:03:42] Bill Nye calls the lottery a tax on people who don't know math. And according to National Statistics, the lottery is a shameful exploitation of poor. In 2018, the average American spent $200 on lottery tickets. In 2019, that number jumped to $320. And as of 2020, we were sitting right around $400 per person on lottery. And that's just the national average. If you isolate it by state, it gets so much worse. New York spends about $441 per person. Delaware is like $455 each. Rhode Island is $508. And in Massachusetts, it's $765 per person.
[00:04:28] Jordan Harbinger: So there are really people just considering the lottery, some kind of investment from the sound of it.
[00:04:34] David C. Smalley: It's disturbing. So in 2014, Derek Thompson, who's a writer for the Atlantic, published a piece on the growth of the lottery and he noted this. He said, "People spend more money on playing the lottery just in 2013 than on books, video games, movie tickets, and sporting events combined."
[00:04:53] Jordan Harbinger: Wow.
[00:04:53] David C. Smalley: And he was shocked to learn back then. He was shocked to learn back — I think he wrote this in 2014. He was analyzing 2013. He was shocked that Americans back then were spending 70 billion per year on the lottery and that has jumped by an additional 10 billion in just nine years.
[00:05:10] Jordan Harbinger: To me, that signals desperation. So it's not just like, "Oh, people love to gamble." There's something else going on here, right? Like, the wealth gap or desperation has increased to a point where we're spending an additional $10 billion on the lottery. I mean, 80 billion is just a staggering amount. A thousand dollars a year for a lot of people is a huge portion of what they take home.
[00:05:30] David C. Smalley: Yeah. And you have people offsetting that, right? So when the mega millions jackpot reached over 1.6 billion a few years ago—
[00:05:38] Jordan Harbinger: Wow.
[00:05:39] David C. Smalley: —one woman walked into a convenience store. And this is on video. You can go find this. She walked into a convenience store and bought 5,535 tickets and lost.
[00:05:48] Jordan Harbinger: Sure.
[00:05:49] David C. Smalley: So yeah, I would say desperate is a good way to describe that.
[00:05:52] Jordan Harbinger: Aren't there people that crack the lottery code and they win the lottery a bunch of times, or it's like syndicates of people?
[00:05:58] David C. Smalley: Yeah. So there was one guy who did it, his name was Stefan Mandel. He figured out a system of the Australian and UK lotteries.
[00:06:05] Jordan Harbinger: Okay.
[00:06:05] David C. Smalley: His system was basically just kind of developing a company and getting investors to just buy tons of tickets and then distributing the winnings. He worked out the odds and figured if you buy a certain amount, you're almost guaranteed to win something. His company ended up winning the lottery 14 times.
[00:06:21] Jordan Harbinger: Wow.
[00:06:22] David C. Smalley: They weren't all jackpots, but he ended up winning over 30 million and then paid out a lot of dividends or whatever. But those federal governments quickly changed the laws and rules to shut him down. And then our government saw it and went, "Okay, we're going to get ahead of the game and shut it down so that no one could ever do that here in the states."
[00:06:37] Jordan Harbinger: Free enterprise, unless you figure out how to screw us while we're trying to screw you in that case, no.
[00:06:42] David C. Smalley: Yeah, like the casinos going, "No counting cards. That's unfair." Are you kidding me?
[00:06:46] Jordan Harbinger: That's unfair. You might actually win something. We don't want that have a free drink.
[00:06:49] David C. Smalley: Right.
[00:06:50] Jordan Harbinger: So whatever chance we had at sort of the card counting of the lottery, figuring out how to crack the code, that's out the window. And I wanted to ask about both things that you opened with. We'll get to Bill Nye's thing in a moment. He was episode 366 by the way. We'll get to that in a second. But why do you say that this is a shameful exploitation of poor people or tax on the poor? I've heard that before.
[00:07:10] David C. Smalley: Yeah. So according to research by the Journal of Gambling Studies, the vast majority of tickets are sold to low-income Americans in poor neighborhoods. So poor people spend much more on lottery tickets than the general population. The Atlantic cites a Duke University study from the '80s, way back in the '80s, showing that the poorest one-third of households bought half of all lotto tickets. And mostly because lotteries are aggressively advertised in poor neighborhoods.
[00:07:41] A North Carolina report from NC Policy Watch found that people living in the poorest counties buy the most tickets and the North Carolina Justice Center noted that out of the 20 counties with poverty rates higher than 20 percent, 18 of them had lottery sales topping the statewide average of $200 per adult.
[00:07:59] So the poorer the county, the more people spend on this stuff.
[00:08:02] Jordan Harbinger: That is horrible. I mean, look, yes, maybe it's the advertising that we put in those areas, but can it also just be that people who need money really bad are willing to do more and more desperate things to get that money?
[00:08:14] Because I don't play the lottery, I know the odds, but also — I'm trying to say this without sounding like an a-h*le — if I won like a hundred grand, it's not going to be something where I would make a special trip to go and do that knowing the odds of me actually winning that. You know, 1.6 billion, all right, maybe I go pick up a couple of tickets, but that's it. It has to get to like an extreme level before I get out of bed, so to speak.
[00:08:40] David C. Smalley: Because you're doing okay and that's kind of the point, right?
[00:08:43] Jordan Harbinger: Yeah. That's my idea there.
[00:08:44] David C. Smalley: For a lot of these people, a hundred thousand dollars feels like 1.6 billion, and that's kind of the point, right? They're being advertised that the lottery can change your life. It's not just, "Hey, the lottery's in town," or, "Hey, it's a dollar a ticket." It's not that simple. It's emotionally charged. It's things like, "You can't win if you don't play."
[00:09:03] Jordan Harbinger: Mm-hmm.
[00:09:04] David C. Smalley: Then they bring people on to go, "What are you going to do with your millions?" And then they'll bring somebody on and be like, "I'm going to take a vacation," or, "I'm going to get my house repaired." "I'm going to pay for my student's college." "Well, you can't win if you don't play. Here's the lottery website." Then it's just drilled into their heads over and over and over that this is a way out of poverty when it's just not. It's just not, it's not even feasible for it to happen to the vast majority of people, but people like to feel special. So the lottery kind of taps into that with their advertising and goes, "What if you are the one? What are you going to do with that money?" It's so unfair to manipulate people that are so incredibly poor.
[00:09:41] Jordan Harbinger: Yeah. I mean, I don't love gambling by any means, and I certainly don't love negative use of influence like that.
[00:09:49] When Bill Nye says this is a tax on people who don't know math. I assume he's talking about the odds.
[00:09:55] David C. Smalley: Absolutely. So a California study shows that rich people play for fun and poor people play as an actual investment. Like they believe their chances are higher than they really are. casino.org notes that if you're playing a typical lotto game where you pick six numbers from a pool of 49, your odds of choosing all six correctly are about one in nearly 14 million. And in many famous lottery games, the odds are even much worse than that. It's one in 45 million for the UK lotto. It's one in 140 million for the Euro millions. And the Powerball you were talking about—
[00:10:32] Jordan Harbinger: Yeah.
[00:10:33] David C. Smalley: One in 292 million for the United States.
[00:10:37] Jordan Harbinger: Right. Because that's the whole country. It's not just like Massachusetts.
[00:10:40] David C. Smalley: Right.
[00:10:41] Jordan Harbinger: State lottery.
[00:10:42] David C. Smalley: Yep.
[00:10:42] Jordan Harbinger: Yeah, the Powerball, that's the one that always has the billboards where it's like $796 million jackpot and it ticks up every day and then it hits the news and then it goes up by another 50 million.
[00:10:52] David C. Smalley: Yep.
[00:10:52] Jordan Harbinger: All right. So let's unpack that for a moment. I don't think people actually grasp what that means. One in 292 million, we're not wired to wrap our heads around numbers like this.
[00:11:05] David C. Smalley: Exactly. You can't even really fathom what it means. And you're right. Most people can't grasp it. But I saw this video, they were trying to demonstrate this where they were on the street. They were trying to have people point to a graphic to indicate what does one in one million look like. Most people pointed to the graphic, that was like one in 10,000 or one in 100,000. So we don't even really know what it means. So like even the one in one million is unfathomable for a lot of people. So turning that into one in 292 million is basically impossible.
[00:11:36] There's this really fun video done by Good Magazine on their YouTube channel. I want everyone to go watch it. It's adorable. And if you want to send it to someone who really like depends on playing the lottery, you should probably send it over to them. So they do this illusion with bananas — illustration, sorry, not an illusion.
[00:11:54] Jordan Harbinger: Illusion.
[00:11:55] David C. Smalley: No.
[00:11:55] Jordan Harbinger: This sounds like something different. And my mommy told me not to talk to people.
[00:12:00] David C. Smalley: Sorry. Yeah. There's this woman who made a banana disappear. Totally different video.
[00:12:04] Jordan Harbinger: Yeah, a totally different video. Not on YouTube.
[00:12:06] David C. Smalley: Not YouTube. It was a different kind of tube.
[00:12:08] Anyway, okay, so they show this illustration with bananas of what it means to be one in 292 million. So they say the average banana is seven and a half inches long.
[00:12:17] Jordan Harbinger: Oh, wow. That's because we all lie about the size of our bananas.
[00:12:19] David C. Smalley: Yeah. Okay.
[00:12:19] Jordan Harbinger: All right.
[00:12:19] David C. Smalley: Insert fifth-grade joke right there. Good job.
[00:12:24] Now, think about how long it takes to drive to work, right? How long does it take you to on your commute? Now think about a road trip you've taken, or you drove for like seven hours or 20 hours or three or four days you drive across the country.
[00:12:37] Jordan Harbinger: It's like you with your comedy tours.
[00:12:38] David C. Smalley: Absolutely. I'm gone for months and it's terrible.
[00:12:42] Jordan Harbinger: A lot of bananas.
[00:12:44] David C. Smalley: I take a lot of bananas when I'm out there.
[00:12:46] So now think about if you could just keep driving and drive the entire circumference of the earth and you were driving next to a line of bananas that wrapped around the earth. The circumference of our planet is 24,901 miles. The bananas are average, that would be 210,363,648 bananas. Assuming, like I said, that they're all average — and there is nothing wrong with average.
[00:13:13] Jordan Harbinger: No.
[00:13:13] David C. Smalley: I just want to say that.
[00:13:14] Jordan Harbinger: That's totally fine. That's why they call it average.
[00:13:16] David C. Smalley: In case my ex-wife is listening.
[00:13:19] But even that around the entire planet is 210 million after going around the entire earth. You'd have to add another 81.8 million bananas extended—
[00:13:28] Jordan Harbinger: Wow.
[00:13:29] David C. Smalley: —out into space, which would add an additional 10,000 miles to this road trip. So winning the Powerball is equivalent to you seeing a 35,000-mile chain of bananas wrapped around the entire earth and extended out into space. And you picking the right banana.
[00:13:44] Jordan Harbinger: That's a really interesting way to explain this because if you laid bananas out from one end of your road to the next, which is a 10th of a mile if you got—
[00:13:55] David C. Smalley: Yep.
[00:13:55] Jordan Harbinger: —a decent size street, can you pick the right banana out of that?
[00:13:59] David C. Smalley: You're still not going to pick the right banana.
[00:14:01] Jordan Harbinger: You're still not going to pick — you could lay bananas down your driveway and not pick the right banana very easily.
[00:14:07] David C. Smalley: Right.
[00:14:07] Jordan Harbinger: Now you have to do it with bananas wrapped around the whole planet and then just extending a couple of hundred or a couple of thousand miles into space.
[00:14:14] David C. Smalley: Exactly.
[00:14:15] Jordan Harbinger: And you got to pick the right banana. Right, that's a really good way, that's a really good way to explain this.
[00:14:19] David C. Smalley: 10,000 miles into space. Yeah.
[00:14:21] Jordan Harbinger: Yes. There's no freaking way you're doing that. Right, it's pure luck.
[00:14:24] David C. Smalley: Right.
[00:14:25] Jordan Harbinger: Well, you're more likely to do just about anything that humans do on the earth, more likely to do that.
[00:14:30] David C. Smalley: You're more likely to win an Oscar.
[00:14:31] Jordan Harbinger: Yeah.
[00:14:32] David C. Smalley: You're more likely to be struck by lightning or become an astronaut or to drown.
[00:14:36] Jordan Harbinger: Okay.
[00:14:36] David C. Smalley: Or to drown specifically in a bathtub.
[00:14:39] Jordan Harbinger: I'll take the Oscar, I think, out of those choices.
[00:14:42] David C. Smalley: Listen, you're more likely to die from being left-handed using a right-handed object incorrectly.
[00:14:49] Jordan Harbinger: That hits close to home as a lefty.
[00:14:50] David C. Smalley: You're more likely to visit the ER for a pogo-stick-related injury or being killed by a vending machine. Like, it's insane.
[00:14:59] Jordan Harbinger: Right.
[00:14:59] David C. Smalley: You're not going to win the Powerball.
[00:15:01] Jordan Harbinger: How many people die from vending machine? That's the real question. How many people die from vending machines?
[00:15:06] David C. Smalley: Oh, I don't know, but there's the ratio to vending machines falling on people to people existing is more likely than people winning the lottery to people existing.
[00:15:14] Jordan Harbinger: The Powerball anyway.
[00:15:15] David C. Smalley: Yeah, the Powerball.
[00:15:16] Jordan Harbinger: Okay. Fair enough.
[00:15:17] David C. Smalley: I do have some good news though. You are more likely to win the lottery than to get a perfect NCAA bracket.
[00:15:23] Jordan Harbinger: Okay.
[00:15:23] David C. Smalley: To shuffle a deck of cards into perfect sequential order or be hit by a meteor or to not get offended by a Skeptical Sunday episode.
[00:15:32] Jordan Harbinger: Okay. Right. Yes, the emails we have gotten about things that we did not think were offensive at all, are—
[00:15:40] David C. Smalley: Goodness.
[00:15:41] Jordan Harbinger: These must be popular.
[00:15:42] David C. Smalley: The funny thing is to me, people angry about things they thought we said that we didn't actually say.
[00:15:46] Jordan Harbinger: Right, that we didn't say at all.
[00:15:47] David C. Smalley: Yeah.
[00:15:47] Jordan Harbinger: You, socialist pigs. You want to do it — no, no, no. That's what we said—
[00:15:50] David C. Smalley: I went back and listened to an entire episode that we did just to make sure I didn't say the thing. And I'm like, I didn't say that thing.
[00:15:55] Jordan Harbinger: Right.
[00:15:55] David C. Smalley: What are we so angry about?
[00:15:57] Jordan Harbinger: And dude's like, "Ah, I must have been tired. Ah, I just misheard you. We're like, "All right, next time we're asking for timestamps."
[00:16:03] David C. Smalley: Yeah. Since some timestamps, how about you double-check that before you fire off an angry email, just go, go fact-check it. That's kind of what the show's teaching to begin with.
[00:16:10] Jordan Harbinger: All right. So we've all heard about, I guess, the tragic stories of people winning the lottery and it kind of ruins their life. I've had lottery winners email me on this show and they all kind of have that cyclical story. Like, "Yeah, we got a bunch of Nintendo games and we got some new cars and then everything just kind of went back to normal," or, "Oh yeah. It's sort of up to our teenage years a little bit. And then back to normal. I wouldn't say it's life-changing." And then you see the ones on TV that are like, "The lottery actually ruined my whole life." I think there's a show called the lottery ruined my life.
[00:16:39] David C. Smalley: Literally is. It's a whole TV series. Yeah, the lottery ruined my life. There's documentaries, the curse of the lottery.
[00:16:45] So one study showed that 44 percent of lottery winners are broke within five years.
[00:16:52] Jordan Harbinger: Wow.
[00:16:52] David C. Smalley: And 70 percent are broke within seven years. You know, I was working with a very wealthy investor one time and I tried to do a fundraiser. He helped me on another fundraiser because we do a lot of that through my podcast. And I had an idea like this very small organization that I wanted to raise a bunch of money for. And he's like, "You got to be careful because when these small organizations have two or three employees and it's a nonprofit. If you get on your show and you raise $500,000 for them, or $200,000, they've never had that much money to manage and things typically go south. And so if it's a small organization, you want to raise small amounts of money. Not that they can't do it, but that things typically do not end very well when someone who's not used to managing a bunch of money, suddenly has hundreds of thousands of dollars dumped in their plate. So the same is true for personal individuals, right? That you're, you've never made more than 30 or 40 or $50,000 a year. Suddenly you have 170 million. Like they bring so many problems with it.
[00:17:50] Jordan Harbinger: You know what's not a scam run by the state you live in? The fine products and services that support this show. We'll be right back.
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[00:19:56] Now for the rest of Skeptical Sunday.
[00:20:00] A fame example is a little bit better. A guy I know — I got to be careful here. A guy I know made a video that went, I will say viral, but what I mean is half of the Western world saw this video in the span of a few months. I mean, and it was early, this is like 2011 or so, and it didn't have him in it or anything. It was just an explanation of a big problem. And it went viral and his organization raised just an absolute ton of money and fast-forward a few months later. And there's a video of this guy walking around naked, outdoors and screaming and jumping up and down on cars. And I knew this guy was a very normal guy. He didn't have a drug problem. He was like kind of a hippie-dippy normal dude. And he lost his mind. He had a breakdown and nothing bad had happened to him objectively.
[00:20:48] He just raised — he had so much attention, so much money positive, all of it. He couldn't handle it. And you think, "Oh, like, that guy's a weirdo. This guy's crazy." I feel like normal people can just lose, absolutely lose their minds from things like this. This pressure and Shep Gordon who's been on the show, famous sort of rock band manager. He managed Alice Cooper and all these guys. He told me once, people always ask him to make them famous, because that's kind of what he does. And he goes, it's never been good for anyone who that's happened to. He's seen it up close and personal since 1960 or whatever. And he is like, it ruins 100 percent of people that it touches fame.
[00:21:25] David C. Smalley: Yeah.
[00:21:25] Jordan Harbinger: Money seems similar.
[00:21:26] David C. Smalley: I totally get that. So there was a pastor in Texas who won 30 million and he killed himself within 20 months.
[00:21:33] Jordan Harbinger: Unreal.
[00:21:33] David C. Smalley: Just because of the pressures and the family problems
[00:21:36] Jordan Harbinger: Oh yeah. You're stingy if you don't give me this. Why aren't you helping your uncle?
[00:21:41] David C. Smalley: If you do give and give and give, you're going to be like the 70 percent that are broke within 7 years. I mean, just like the odds don't make sense to us, the amount of money doesn't make sense to us either. It feels like it's more money than it is.
[00:21:53] Jordan Harbinger: Mm-hmm.
[00:21:53] David C. Smalley: And then you have taxes, you have other fees, and then you have people — even when you help someone, that person thinks that now you're an endless source of money.
[00:22:00] Jordan Harbinger: Sure.
[00:22:00] David C. Smalley: Because they don't grasp how much you have. They always think you have more than you do. The social pressures are just insane. And I've got a couple of friends who are incredibly wealthy and when we all go out together, I always make it a point to pay for my own food to buy them a drink. I want to treat them like a person. I want them to know. I don't expect anything out of their funding because they probably have hundreds of people around them that do it, and that kind of cornered him.
[00:22:23] And I had one of them on my show one time, like questioning a millionaire. And he let me just ask him anything I wanted, even if it was inappropriate. It was so fun. Like, "How much money do you have? Do you buy your cars? Do you pay a mortgage? How does this work?"
[00:22:38] Jordan Harbinger: That's an interesting show.
[00:22:39] David C. Smalley: Yeah. And some of the stuff he would answer and some of the stuff he'd be like, "No," and I'm like, "Well, I'm going to read an article about you and you tell me if this is true,' and he would just laugh and be like, "I'm not Batman. That's bullsh*t, you know?"
[00:22:48] Jordan Harbinger: Yeah.
[00:22:48] David C. Smalley: And so it was a really fun episode, but you know, anytime I go out with him, he told me one time that a guy cornered him at a bar because he knew who he was and was like showing him pictures of like his kid, like dead in a coffin and yeah, like a four-year-old who died from something. He's like, "We need money for this. We need money for that." And he's like, "I just got to get the hell out of here."
[00:23:07] Jordan Harbinger: Yeah.
[00:23:08] David C. Smalley: He's like, "If you have several million, how do you not hand that guy five grand? But if you do that, how do you not hand everybody $5,000 or stop and give every homeless person 20 grand?" Like, you're going to be one of those people if you don't have some boundaries. And so it can feel selfish, but really it's about sustainability. He wasn't wealthy before and he had a whole team of people around him, including his family and his father and other people to go, "Listen—" and by the way, he went to college for strategy, so like he was wrapping his head around, "You know, how do I strategically make this money work for me instead of just handing it out?" So he just has a policy. He doesn't give money to individuals. He'll do it to certain nonprofits, but he won't give money to individuals. He's a very, very generous person, despite that. He gives so much money to charities. And I've been out with him before where he'll rent out some very expensive location and be like, "I'm taking care of this. You buy your own drinks," and he'll invite a bunch of people. So it's just important to do it the right way. And most people don't have that training. They don't have that wherewithal. They don't have that support group.
[00:24:07] Like I said that pastor killed himself within 20 months because of the pressures. There was a man named William Post who won $16 million. I think he was in Texas and his girlfriend sued him saying she was entitled to some of that money.
[00:24:20] Jordan Harbinger: Okay.
[00:24:20] David C. Smalley: And she actually won in court and got a huge chunk of it.
[00:24:24] Jordan Harbinger: Okay. Weird.
[00:24:24] David C. Smalley: And then one of his brothers was arrested for hiring a hitman to try to kill him because he was next in line to inherit the money.
[00:24:31] Jordan Harbinger: Ah.
[00:24:32] David C. Smalley: And then his other brothers got him to invest in some failed companies. So he survived the hit, his brother ended up in prison, but he ended up in debt, eventually owing over a million dollars. And then he spent some time in jail himself for shooting at a bill collector. He ended up living on social security until his death in 2006.
[00:24:50] Jordan Harbinger: Oh, that's super tragic.
[00:24:51] David C. Smalley: Yeah. There was another guy named Jeffrey Dampier who won $20 million and he was actually smart with his money. So if you're out there thinking, "That wouldn't happen to me. I'd be smarter. I wouldn't tell anybody." In some states, it's required by law that your name is listed. So you can't always be anonymous when doing this.
[00:25:08] Jordan Harbinger: Right. You can't be anonymous and hide. Yeah. Yeah.
[00:25:11] David C. Smalley: And Jeffrey Dampier won 20 million. He was smart with his money. He invested into a business. It was actually thriving. It was doing well. Seven years into it, he got shot in the back by his ex-sister-in-law and her new boyfriend because they were trying to steal his money. He did not survive the attack.
[00:25:26] I've got one more story, but if you wanted to chime in on any of that, I wanted to give you an opportunity.
[00:25:30] Jordan Harbinger: No, that's terrible. I mean, look, maybe not all lottery winners have horrible people around them, but you become a magnet for these types of predators, especially if your name is listed by law. Because I would imagine even people who aren't trying to kill but just lawyers and financial advisors and other shyster types are calling you like, 'Hey, you got to make sure you do this. Hey, do you have a financial advisor? Hey, do you have an accountant, bookkeeper? By the way, I got an investment—" I mean, there's probably all kinds of just normal business people coming after you, but then you can't tell who those people are from the scammers, from the people who are going to kidnap you for ransom or whatever. And I assume you don't get a lump sum most of the time, right? They probably pay it out over 20 years unless you select—
[00:26:10] David C. Smalley: Usually you get to pick. And most people pick the lump sum.
[00:26:12] Jordan Harbinger: Okay.
[00:26:13] David C. Smalley: So, yeah. And even like Dane Cook — have you heard Dane Cook's story? Have you ever interviewed him or got to talk to him about what happened?
[00:26:18] Jordan Harbinger: I do. You know, it's funny. He listens to the show sometimes, but I didn't know anything about the lottery with him. No.
[00:26:22] David C. Smalley: No, no. It's not the lottery. It's just that he was getting a lot of money from his comedy career. And his brother was actually managing his finances and turned out he just stole so much money from Dane.
[00:26:33] Jordan Harbinger: Ugh.
[00:26:34] David C. Smalley: I believe he's in prison now.
[00:26:35] Jordan Harbinger: That's terrible.
[00:26:36] David C. Smalley: He stole millions, I think, from Dane over the years. And so Dan had to like rebuild his wealth and recover from his own brother stealing from him.
[00:26:43] Jordan Harbinger: That's terrible.
[00:26:44] David C. Smalley: Like you're right. People are thinking right now. Like they go, "Well, yeah, that's the odds against me, but I'm going to be special," or, "Yeah, I'm going to figure it out," or—
[00:26:51] Jordan Harbinger: Sure.
[00:26:51] David C. Smalley: "I could handle the stress because I would do it this way." Sure, we all like to think we could. We also like to think there's nobody in our life that would do that to us, but think about it. We all have people in our lives that we've had a falling out with that we don't talk to anymore. What if you were worth 140 million when that happened? That person goes from just hating you or typing a message on Facebook to literally trying to murder you and take your wealth. I mean, you know, you live by the sword, you die by the sword, right? So it's just a dangerous sort of place to play.
[00:27:21] I mean, I've got one more story I want to share. You may remember this one, it definitely made the news. In 2015, there was a 26-year-old woman named Marie Holmes. She was working two jobs. She had four kids, one of which had cerebral palsy. She won 188 million as her portion of a jackpot in North Carolina. She took the lump sum payment of 127 million. She had to pay about 50 million in federal taxes and then had state taxes on top of that. She publicly said, as she accepted it, she was like, "I'm going to tithe," meaning give 10 percent to God. She bought a house. She put some money towards her child with special needs and she donated $700,000 to her church. I wish we could just say that was the happy ending. The church was happy and everybody moved forward.
[00:28:03] Jordan Harbinger: Yeah.
[00:28:04] David C. Smalley: The problem is she also spent several million dollars bailing her boyfriend out of jail a few times on drug charges.
[00:28:11] Jordan Harbinger: Well, a few million dollars. Well, these are legal costs than to not just bail money at this point.
[00:28:16] David C. Smalley: Right. I think one article I read said it got up to like $12 million, like his bail and bond and all of that.
[00:28:22] Jordan Harbinger: Oh man.
[00:28:23] David C. Smalley: And then he went back to jail again after being bonded out and she had to bail him out again.
[00:28:28] Jordan Harbinger: To forfeit the money. Yeah. Oh, man.
[00:28:30] David C. Smalley: And because he was charged with everything because he was bonded out based on conditions, right? So when you get a second chance and then you get arrested again, you get kind of convicted for everything, including the first stuff. And then your bail is much higher. So she paid all this money. I think I saw around 12 million, one report said 20 million, but I couldn't verify it, but it was ridiculous.
[00:28:50] Jordan Harbinger: Yikes. Okay.
[00:28:51] David C. Smalley: So I wish the story ended there, but she started doing that. Then a new pastor shows up his name's Kevin, Matthews. He befriended her because he said, "God called him to minister, to Holmes and her family.
[00:29:03] Jordan Harbinger: Uh-huh.
[00:29:03] David C. Smalley: This was after she won the lottery, of course.
[00:29:05] Jordan Harbinger: Of course.
[00:29:05] David C. Smalley: So then he pitched an idea to her to pay 1.5 million for a retreat. He wanted her to build, that he wanted to build and wanted her to fund it. He says she verbally agreed, but the donation never happened. So Pastor Matthews filed a $10-million lawsuit, claiming that he put his own money into the retreat, thinking Holmes was going to pay him back. And so he sued her for emotional damage and anxiety and depression all caused by not getting her donation. Now, again, this was not somebody she knew, this was not somebody in her circles. She was a very religious woman and donated 700 K to her church.
[00:29:38] Jordan Harbinger: Right.
[00:29:39] David C. Smalley: And then he showed up saying, "God called me to talk to you." Yeah, of course, God.
[00:29:43] Jordan Harbinger: Yeah, con man.
[00:29:44] David C. Smalley: And so there's no public record of how this was resolved. So it's pretty safe to assume it was finally dropped or thrown out or whatever, but just when you think the drama ends there, multiple family members started coming forward accusing her of stealing the lottery ticket from her grandmother.
[00:30:00] Jordan Harbinger: Ugh.
[00:30:00] David C. Smalley: And as far as I know, that's an internal issue. And right now the Marie Holmes Foundation is still an active thing in North Carolina, but damn they can keep that drama as far as I'm concerned.
[00:30:11] Jordan Harbinger: You know, what's funny, the grandmother thing — I don't have, this is pure speculation. But I would assume the grandmother was no longer living. And the reason the people came forward and said, "Hey, you stole that ticket from grandma," is because when grandma died, she probably left very little to a bunch of people/nothing but if she stole that ticket from grandma, then that money was grandma's, which would mean that then all of these other a-h*les that came out of the woodwork are suddenly entitled to about 10 million bucks a piece, right? So then they concoct this story about how it's grandma's lottery ticket.
[00:30:40] David C. Smalley: Right. Now, there was a TV show that covered a little bit of this, and Marie's mom told her on camera for the first time that those numbers were not random. And Marie looked like stunned. Like, what are you talking about? Because Marie had been asked in interviews before how'd you do this? And she was like, "Oh, it was a quick pick," or, "Oh, it was just a random number," or whatever. So why did Marie not know if she bought the ticket, which is a huge red flag, right?
[00:31:06] Jordan Harbinger: Oh, interesting. So you think maybe she did steal it from grandma.
[00:31:09] David C. Smalley: Well, the mom was like, "If you look at the numbers, it was your birthday. It was your brother's birthday. It was the day someone died."
[00:31:17] Jordan Harbinger: Oh, so grandma's not dead.
[00:31:18] David C. Smalley: Well, this was a mom I think. This was Marie's mom.
[00:31:22] Jordan Harbinger: Oh, okay. Okay. Oh, I see. See, I see. Yeah, I'm confused. This is a big family tree.
[00:31:23] David C. Smalley: I know. But there is some confusion there and whether she did it or not. Who wants that, right? Who wants that level of drama?
[00:31:30] Jordan Harbinger: Nah, keep it.
[00:31:30] David C. Smalley: Yeah. So that's where that ended up with for her. But there's just so many stories that go like that, that even if you do win, it's not like it's going to be necessarily a good thing for you.
[00:31:39] Jordan Harbinger: Right. So hitman, con man, suicide, depression, and all these other things aside, if people play, at least they're helping the schools, right?
[00:31:47] David C. Smalley: Well, uh, so the official California lottery website, just to pick on California says, and I'm quoting, "95 percent of what you spend on lottery tickets goes back to the community."
[00:32:00] Jordan Harbinger: What does that mean?
[00:32:00] David C. Smalley: I got to say this. This sounds pretty sketchy. I mean, Jordan, if you pay me a million dollars an episode and I blow that on cocaine and strippers that went back into the community.
[00:32:09] Jordan Harbinger: True. Yeah. It depends where your drug dealer lives, but yeah,
[00:32:12] David C. Smalley: I'm basically running a charity here, man. And the site also says, "The lottery has given California public schools more than $39 billion." The problem is they've been counting since 1985 and that dollar amount works out to about one percent of the total state education budget, and a recent audit found that the state lottery has not been increasing its funding for education in proportion to its increases in revenue. As a result, they state that the California lottery system owes the education fund 36 million in funds promised to public education, but were never paid by the California lottery. And CBS reports that the audit also found the agency — you got to follow, stick with me for a second. This one gets a little confusing.
[00:32:57] Jordan Harbinger: This is a crack in the case.
[00:32:59] David C. Smalley: Yeah. So the audit found that the agency entered into eight non-competitive agreements, totaling 5.7 million and did not appear to accept the lowest bid for 17 other agreements, which they should have, valued at $720,000. And the state controller's office was also taken a task in the same audit for lax oversight of the state lottery — and here's the piece right here, stick with me — they were taken the task for removing a significant finding from another recent audit report, after the lottery disputed the finding, and then allowing the agency to submit a report to the legislature that was actually written by the lottery. And the director of the California lottery pushback, calling it a difference of opinion. So that's how that's ending.
[00:33:44] Jordan Harbinger: Man, the lottery brings drama wherever it is. So the lack of oversight and transparency obviously make it very difficult to determine exactly where the money goes and, of course, what they mean by community, when they say the money goes back to the community.
[00:33:56] David C. Smalley: Yep. So publicschoolreview.com published an article and the title of the article is Do Lotteries Really Benefit Public Schools? The Answer is Hazy. And they detail some of the mystery around how the funds are distributed. So they note that it varies by state, of course, showing how Virginia gets about eight percent of its education budget from the lottery while California uses about 32 cents from every dollar on Mega Millions for schools. Sounds good—
[00:34:24] Jordan Harbinger: When they pay their bills, when they pay their bills.
[00:34:26] David C. Smalley: Only when they pay their bills.
[00:34:28] So they go on to say, and this is the quote from that article, "With states like these boasting huge windfalls in lottery revenues, it seems hard to believe that some of the same states are the same ones in the midst of cutting their education budgets. If the lotteries are thriving, why aren't the schools improving as well?"
[00:34:47] Well, here's the thing. According to the Washington Post, one of the biggest problems is that the more the lotteries bring into schools, the more states cut education budgets in anticipation of those windfalls. So the Washington Post op-ed states, "Instead of using the money as additional funding, legislatures have used the lottery money to pay for the education budget, and then spent the money that would've been used had there been no lottery on other things."
[00:35:13] Jordan Harbinger: Right. So instead of saying, "Hey, we're going to have the lottery to shore up your budget." Now. They're like, "Well man, this lottery's killing it. Why don't we just have the lottery replace the education budget, and then we'll take the education budget and we'll do some other crap with it." So now there's less money going to education because well, the lottery's not paying their bills in the state of California, but also if they have a shortfall or anything like that, well, there's no education budget. So now the lottery just has to pay for school. And if it falls short, oh, well.
[00:35:41] David C. Smalley: Right. And so the schools are not being improved. Nothing's getting better. In Virginia, money gained from the lottery is now being used by state lawmakers, specifically for regular education expenses rather than additional education funding.
[00:35:55] So, Kitty Boitnott, who's the president of the Virginia Education Association told the Washington Post, quote, "It's a big ruse and I don't believe Virginians, in general, are aware of it," end quote.
[00:36:08] Jordan Harbinger: Oomph.
[00:36:08] David C. Smalley: Not only are your odds ridiculously impossible and you're fooling yourself to believe otherwise. How much help it's actually providing our schools just seems to be vastly overrated? So I just hope people stay skeptical of the lottery.
[00:36:23] Jordan Harbinger: David, thank you very much? Off to buy some scratchers.
[00:36:26] David C. Smalley: Good luck, brother.
[00:36:27] Jordan Harbinger: Thanks. Ah, I know I'm going to win.
[00:36:29] David C. Smalley: Oh, of course. Yeah, you totally will, Jordan.
[00:36:31] Jordan Harbinger: I'm special.
[00:36:31] David C. Smalley: Yeah.
[00:36:34] Jordan Harbinger: You're about to hear a preview of The Jordan Harbinger Show with a former pimp in how he uses mind manipulation.
[00:36:40] Mickey Royal: A pimp teaches a woman how to manipulate men. So I'm teaching her, but what she notices after the teachings or during teachings that, "Hey, you're a man too." So it's only natural that she works these feminine wilds on you. A smart prostitute will make a fool out of a stupid pimp any day. So any vice you may have, they're just hooks. It gets to the point where you become a narcissistic sociopath. You become empty. You become hollow. You experience no joy. You experience no pain. You want no love. You want no hate. You're just an empty room. You can't love money. You can't hate it. See the puppet master cannot have any interest, any wants, any lust, any desires, any dreams, any goals, nothing. Why? So he can control your lust, your dreams, your desires. You don't do anything so that you can become everything.
[00:37:33] I have an aversion for women who are six feet tall. And like one woman said, "In my heels, I'm 6'5", you're 5'7", but I find myself looking up to you." See I'm 10 feet tall around her and she's all-powerful in my presence. So we can't separate. Anything that was insecure about you, that you thought, it evaporates.
[00:37:51] You know, I've been shot twice. I've been stabbed once. Mexican mafia tried to kill me in my sleep. I've done three bank robberies in my life, two on purpose, one by accident. Knowing what I know, the scars I've received. The consequence that I pay, would I do it all again tomorrow? Yeah, I would. It was that good of a ride. I would not be strong enough to resist the allure. It does have a deep psychological effect. And the only way to avoid the effects is to stay there. Even the woman I told you who lives in the $11-million house. We just got quiet one time and I said, "Ah, you ever miss it?" And she said, "Every day."
[00:38:25] Jordan Harbinger: For a chilling peek into the shadow world and the life in mind of former pimp Mickey Royal, check out episode 548 of The Jordan Harbinger Show.
[00:38:35] Thanks again to everybody for listening. I love your topic suggestions. Many of you have really, really good ones. Our list is a mile long, but that doesn't mean you should stop sending them. Definitely hit me up via email, anywhere you can reach me, or email me, email@example.com and give me your thoughts and suggestions.
[00:38:51] A link to the show notes for this episode can be found at jordanharbinger.com. All the resources we've mentioned in the show will be linked in there as well. Transcripts are in the show notes. I'm at @JordanHarbinger on Twitter and Instagram. And you can also connect with me on LinkedIn. You can find David Smalley at @davidcsmalley on all social media platforms, at davidcsmalley.com, or better yet on his podcast, The David C. Smalley Show. Links to all that will be in the show notes as well.
[00:39:16] This show is created in association with PodcastOne. My team is Jen Harbinger, Jase Sanderson, Robert Fogarty, Ian Baird, MIllie Ocampo, Josh Ballard, and Gabriel Mizrahi. Our advice and opinions are our own, and I'm a lawyer, but I am not your lawyer. So do your own research before implementing anything you hear on the show. Remember, we rise by lifting others, so share the show with those you love. If you found this episode useful, please do share it with somebody else who needs to hear it. In the meantime, do your best to apply what you hear on the show, so you can live what you listen, and we'll see you next time.
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