Are lottery scratch tickets by far the worst way of gambling?

[eugeneel]

I'm kind of curious what 2+2ers think of this. We had a statistics class last semester where we did various exercises regarding the expected return of a normal $1 lottery scratch ticket. It was calculated (based on the money given out as prizes) that the expected return on this one dollar ticket was about 63.4 cents. Is there really any casino bet that you can make that has a lower expected rate of return? I would like to NOT take in to account doing obviously stupid things in games that require skills (like hitting on a 20 in blackjack, or switching the dealt full house in video poker).

I know that slots usually have a 90%+ rate of return. What would be the % for some of the poor bets in craps? Horse racing? Other bets?

-Eugene

[MMMMMM]

The gambling game with the worst rate of return to found anywhere is probably Three-Card Monte /images/graemlins/wink.gif

[John Cole]

M,

Often, though, in three card Monte the EV is pretty good on your first attempt. /images/graemlins/grin.gif

[bigpooch]

63.4 cents on the dollar? That's a lot compare to about
40-50 cents on the dollar up here in Canada for the typical
6/49 lottery draw! Looking at the data for the last draw
on Saturday, January 24, 2004, the equity on a $1 ticket was
a mere 47.86 cents, not even half a buck! I don't know
about scratch tickets around this neck of the woods, but I
am pretty sure the equity would be even worse! By the way,
the 6/49 is one of the most popular lotteries here in
Canada.

Up here, slot machines don't even pay off 90% (but I have
heard that on some cruise lines, slots don't even pay off
80%!), the SportsAction odds are worse than in Ontario, so
I would guess the Scratch tickets are just about the worst
on the planet! I think possibly raffle tickets would be
quite poor for their equity value, but some buyers know that
they aren't getting fair value!

[TylerD]

Not quite as bad, but the fruit machines in this country (more advanced version of the slots) have a return of 70% - 78%, yet you always see pissed up guys dropping £20+ into these things (and I used to be one of them).

A licence to print money.

[Kurn, son of Mogh]

Hmmm, government run gambling gives you a .634 rate of return, but privately run gambling, even on nickel slots, gives you about a .90 rate of return. Any question regarding who rips you off more, government or private industry?

[superleeds]

Thats because privately run gambling has competition /images/graemlins/cool.gif

[banditbdl]

I gotta think those pulltabs they sell in bars and bowling alleys pay like 40 cents on the dollar.

[scotnt73]

id think the regular state or powerball lotteries would prob pay out worse than the scratch offs. In Texas you cant enter a convenience store on Wed or Sat night because thats the lottery night and the lines are just crazy! Ill see joe sixpack the construction worker buy 100$ worth of lotto picks right before granda purchases her weekly 20$ worth. I think the govt has finally found a way to tax the poor-lower middle class without them knowing it and let everyone else keep thier money. In Texas we dont have a state tax so i guess as long as the sheep keep playing the lotto in droves twice a week the rest of us can sleep better at night.

Before anyone gets offended im lower middle class and im not saying all middle class and below are doing this.

[ScottTheFish]

The absolute DUMBEST thing lottery players do is only play occasionally, when the jackpot is really big, and there are way more people playing than normal. WTF!?! Why play only when you have the absolute WORST chance of winning, even worse than your normal virtually 0 chance?

Oh, the jackpot is twice as big this week as last week...then I have to wonder WHAT the hell can you buy with $200 million you can't buy with $100 million?

I'll never understand people.

[andyfox]

http://www.best-online-casino.com/online-casino-tips.pdf

Most bad casino bets are usually made in conjunction with some less bad bets. For example, a player may take and lay odds on a pass line bet, which yields no advantage for the house. But at the same time, he may make a hard way bet, which yields a teremendous house advantage. So in the aggregate, his good bets are not as good as they should be, and his bad bets not as bad as they should be. Not too different from poker where even good players make bad bets along with their good ones.

Then, too, the casino has a luring addictiveness that beckons its customers to play more and to play games other than the best ones (best from the customers' standpoint of yielding the smallest edge for the house). There's no such gambling temptation for those who buy scratchers at their local 7-11.

[elwoodblues]

[ QUOTE ]
Why play only when you have the absolute WORST chance of winning

[/ QUOTE ]
Your odds of winning a 300 million dollar jackpot are exactly the same as a 10 million dollar jackpot. They don't change the number of balls when the jackpot goes up. Your odds of winning 100% of the pot go down, but your odds of winning remain the same.

[pudley4]

[ QUOTE ]
The absolute DUMBEST thing lottery players do is only play occasionally, when the jackpot is really big, and there are way more people playing than normal. WTF!?! Why play only when you have the absolute WORST chance of winning, even worse than your normal virtually 0 chance?

[/ QUOTE ]

The odds against winning are exactly the same, whether 1 person, or 1 billion people are playing along with you.

[ QUOTE ]


Oh, the jackpot is twice as big this week as last week...then I have to wonder WHAT the hell can you buy with $200 million you can't buy with $100 million?

I'll never understand people.

[/ QUOTE ]

If the odds against winning are 80 million to one, and the payout is 40 million, it's a -EV bet. If the payout is 150 million, it's a +EV bet. Simple.

[Al_Capone_Junior]

i think the worst craps bet is 16.67%.

lottery is clearly the worst bet available anywhere.

al

[andyfox]

"If the payout is 150 million, it's a +EV bet."

In the long run. But of course in the long run we're all dead. Most people die before they see the long run in the lottery.

That is, 99.99999% of the population would end up the same way if they only bet the lottery when it was +EV as those who only bet it when it's -EV: they lose all their money. The odds of winning are simply too high no matter whether it's +EV or not.

[Zeno]

Keno, which is essentially a lottery, offered in almost every casino in the US probably has similar return. I think Keno is usually one of worst gambling games to play in most casinos. I'm sure I'll be corrected if I am wrong on this.

-Zeno

[Kurn, son of Mogh]

The odds of winning are simply too high no matter whether it's +EV or not.

So what? I play the same number in Powerball every drawing. That's $2 per week, or approximately 14% of my weekly expenditure at Starbucks. Do I expect to win? Of course not. But I do get to fantasize about what I'd do with the cash on my long, annoying commute home from work each night. Now, I could be fantasizing about banging Selma Hayek while driving, but the truth is I've got way more chance of winning powerball than of ever banging Selma Hayek. /images/graemlins/wink.gif

[ScottTheFish]

[quote

[/ QUOTE ]

The odds against winning are exactly the same, whether 1 person, or 1 billion people are playing along with you.



[/ QUOTE ]

No kidding. Are the odds also the same for having to split the jackpot with a bunch of people if you are playing vs. one billion or one person? That's what I meant, the odds of winning the WHOLE jackpot go down. That's what I should have said.

[ QUOTE ]
If the odds against winning are 80 million to one, and the payout is 40 million, it's a -EV bet. If the payout is 150 million, it's a +EV bet. Simple.

[/ QUOTE ]

Sure it is. I suggest you stop playing poker and start putting all your money into lottery tickets. As a poker player you know to never pass up a +EV bet /images/graemlins/wink.gif

All you have to do is buy 80 million tickets and boom, theoretically you should hit your 80 million to one shot. Simple. Don't do it all at once though, could get expensive. I suggest 1 million a year for 80 years.

[Ulysses]

[ QUOTE ]
but the truth is I've got way more chance of winning powerball than of ever banging Selma Hayek. /images/graemlins/wink.gif

[/ QUOTE ]

If you win PowerBall, your chances of banging Selma Hayek will increase considerably.

[andyfox]

Banging Selma Hayek would be the ultimate power ball in and of itself, don't you think?

[youtalkfunny]

"More than 100%? That's not possible!"

But it IS possible. And they do it every week. In some states, 2 or 3 times per week.

First, they rake 50%. If you win, they just dropped half the pot down the rake.

No prob, you're thinking. Push me the pot, dealer, I'll live.

But the dealer DOESN'T push you the pot. He KEEPS the pot, invests that money, and kicks 5% per annum your way, for 20 years.

So half went down the rake. The other half gets invested for 20 years, and gets dropped down the rake at that point.

Also, any interest that money generates above the 5% that they owe you? They keep that, too.

"But that extra interest doesn't count as 'rake'. You said MORE THAN 100%. I'll grant that they skimmed 50% up front, and got the other 50% twenty years later. That adds up to 100%. You said MORE THAN 100%. Is there more?"

You bet your sweet Aunt Fanny there's more...


...THEY TAX YOU! Give 'em back HALF of what they push you!

And watch 'em drop it down the rake!

(How can any state that generates hundreds of millions of dollars of revenue this way...how can they DARE to impose any tax on anything else? How can you NOT be able to run a state on that much money?)

[clovenhoof]