Is it ever worth playing the lottery

Malthusian

Mickey666 said:

I find it interesting that firstly, the OP is an economist (knows the price of everything but the value of nothing? ) and that secondly, no one has mentioned the pleasure that some people get from gambling.  That must have some value, right?  And if £2.50 buys a week's worth of pleasurable anticipation and day-dreaming about how a win could change their lives, then it could be considered that it's £2.50 well spent - win or lose.

Lotteries: A Waste of Hope

Day-dreaming about becoming a millionaire is free.

No-one else has mentioned the pleasure that some people get from gambling because it's irrelevant. The thread is about whether you should play the lottery if you're not a gambler but have identified a "gambling" game that has a negative house edge, i.e. is in favour of the punter (unlike almost every single gambling game as the bookie or house would go bankrupt otherwise).

mooneysaver said:

https://www.cbsnews.com/amp/news/jerry-and-marge-selbee-how-a-retired-couple-won-millions-using-a-lottery-loophole-60-minutes-2019-06-09/

Shame about the unwarranted abuse because that's actually a very interesting article in the context of the thread.

In brief, the couple identified a US state lottery that had a very similar feature to the Euromillions draw (rolled over prize fund which cannot be rolled over again resulting in a positive expectation of return, aka negative house edge). The crucial difference is that whereas in the Euromillions draw you'd need to spend millions of pounds to reduce the risk of loss to zero, the "Winfall" game worked in a way that meant you only needed $1,100.

I said if I played $1,100 mathematically I'd have one 4-number winner, that's 1,000 bucks.  I divided 1,100 by six instead of 57 because I did a mental quick dirty and I come up with 18. So I knew I'd have either 18 or 19 3-number winners and that's 50 bucks each. At 18 I got $1,000 for a 4-number winner, and I got 18 3-number winners worth $50 each, so that's 900 bucks. So I got $1,100 invested and I've got a $1,900 return.

Eventually, of course, the Michigan state lottery realised what was happening and shut the game down. The Selbees then moved onto a Massachussets game which had the same "loophole", which was shut down in turn. At that point the Selbees and their syndicate appeared to have called it a day as there wasn't another state which repeated the error. A classic case of arbitrage.

The lotteries didn't exactly "lose" anything from the syndicate who identified that a guaranteed return could be made with a relatively small stake; the lottery had already committed to paying a certain amount out as the prize fund and in the short-term it wasn't their problem who won it. They still got their cut.

However in the long run, one or both of two things could happen: 1) punters get disillusioned because the smart money is scooping up all the prizes, leaving not enough to go around the "real" players who just buy single tickets, 2) everyone starts betting in this way in which case the expected return falls to almost zero. (If enough people are entering the lottery in pursuit of rolled over funds, the rolled over funds become an increasingly small proportion of the prize fund, and the expected return tends to zero or negative.) So of course the loophole was closed.

It appears unlikely that Euromillions will do the same because the numbers are so large that anyone who could afford to diversify away the risk of loss wouldn't bother.

Running a draw with a negative house edge is better for a lottery than having too many rollovers in succession, as the punters get disillusioned if the woman in the glittery dress says "No-one won again, better luck next week losers".

Malthusian

It's obligatory at this point to post the classic joke about economists. Two economists walk down the street and one says "Look, a ten pound note". The other replies "Impossible, if it was real, somebody would already have picked it up."

The loophole in the Michigan and Massachussets state lotteries was a classic ten pound note on the ground.

deejaybee

I only play the lotto when its a " Must be won draw"

Dosnt make the odds of winning any better, but at least you will win more if you get lucky ( unless someone gets all 6 )

I was actually glad in a way when they added the extra numbers up to 59 on Lotto, as it gave me the push to stopplaying the 2 lines i had done since it started.....  as it was now like being struck by lightning while riding Shergar alongside Lord Lucan, rather than just being struck by lightning

mjm3346

deejaybee said:

I only play the lotto when its a " Must be won draw"

Dosnt make the odds of winning any better, but at least you will win more if you get lucky ( unless someone gets all 6 )

I was actually glad in a way when they added the extra numbers up to 59 on Lotto, as it gave me the push to stopplaying the 2 lines i had done since it started.....  as it was now like being struck by lightning while riding Shergar alongside Lord Lucan, rather than just being struck by lightning

When they changed it to add a £5 to the match 2 that knocked around £7,000,000 off the amount to be shared by the other winners so I stopped doing the normal "must be won draws" and only do it now if it is a guaranteed £20 million (etc) which makes the rolldowns work out about the same as before the £5 prize was added

deejaybee

Good point

mjm3346

Last Sat was a rolldown - the jackpot hadn't even reached £12 million, the £5 prizes took almost £7.5 million leaving the enhanced match 3 at £51 from £30 and match 4 was only £179 from £140.

deejaybee

Yep the "enhancements" were nothing to shout about.

In future will just do the " guaranteed amount" must be won draws like you.

I did win one of the £5 prizes ( and lucky dip ) haha

chockydavid1983

I've never played the lottery.
There is a "gambling" game with a negative house edge I do play though - investing in index funds long term :-).

daz378

I do have a regular small punt on the lottery   ...knowing the odds are miniscule.....remember someone said " the lottery is a tax on fools"

Linton

One good bit of advice I saw about the National Lottery was that you should buy your tickets on a Friday afternoon.  Any earlier you are more likely to die than live to hear that you have won the big prize.