This past week the United States was in a frenzy over the Mega Millions lottery that had reached over a half a billion dollars. Yes that's billions with a B. Reports were coming in from all over the internet about lines of people waiting to buy their tickets at a chance to hit it big. I will admit I bought a ticket to but I only spent $5 on a ticket. That purchase is the first time I have bought any lottery tickets in the last 5 years at least. I hardly ever play the lottery basically because I do not like to give me money to a game that has ALMOST the same odds of winning if I choose not to play at all , not really something I enjoy doing.
As I was standing in line their were 3 people in front of me and each one of them bought tickets to. The first lady spent $50 , the second 30$ and the third was over $100. Now I did not stop to ask them if they were all for themselves or if they were part of a pool at work or something like that but more than likely it was for themselves.
The thing that I realized was that there is nothing stopping these people from doing this with whatever money they have. Basically you could withdrawal your entire life saving if you wanted to and spend it all on lottery tickets should you choose to do so yet most Americans are not allowed to invest in hedge funds if they wanted to because they do not meet the governments criteria for doing so. They are not "accredited investors" meaning the government feels that hedge funds are to risky for the general public and they are not smart enough to make they decision for themselves so the government will make it for them.
Now here is where my problem is....... The odds of winning the lottery are worse than most , if not all , Las Vegas casino games. Now say you are an average Joe and you make have an annual income of say $40,000 a year . One day your grandmother passes away and leaves you with an inheritance of $500,000. You are not financially savvy enough to invest it yourself because you feel you all do the wrong thing and lose it all so you get a hold of a hedge funds number and give them a call and upon speaking with them , although they would be happy to take your money , they must turn you down because you have to at least have a net worth of $1,000,000 or more according to Uncle Sam's guidelines that he set for you. Saddened by this news you think to yourself " Well the government says I am not smart enough o give my money to a hedge fund until I have $1,000,000 so I guess I will have to go to Vegas and turn this $500,000 in $1,000,000 then I can invest with the fund!"
Where is the government now? Nowhere. They do not care if you want to go to Vegas and waste all your money. Instead of letting you invest in the fund where the odds of it going to zero are pretty slim they have no problem letting you throw it all down on roulette or craps or whichever game you wish. Perhaps while you are waiting for the Blue man group to come on stage you decide to spend $10,000 on Keno . No problem!
My point here is that laws like this that written have an adverse affect than what they were originally intended to. The problem is that the people who play the lottery , go to Vegas or gamble in general are the same people LEAST able to afford to do so. Either let anyone invest in hedge funds if they wish too or pass a law capping the amount of money you can spend in Vegas.
These laws that were written remind of some of the scariest words in the English language which are : "Hello I am from the government and I am here to help"
Pipmeister
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