state lottery +ev?

[george w of poker]

the texas state lottery is up to $120 million today. if the odds are about 50 million:1 then it seems like its a +ev gamble but only if you can scoop the pot. if you have to split it then you've lost money.

either way, i'm going to buy my first lottery ticket tonight.

[HDPM]

Even if it's marginally negative EV, the marginal utility idea comes into play. The $1 isn't very useful to you. But 120 million sure as hell would be. So unless you are very poor or you spend so much on tickets that it really matters, buy a ticket. I don't buy them often, but I never sweat the EV when I do. I might buy 20 per year. Maybe a few more, I dunno. So in a lifetime I might spend 1000-2000 or so. I had a 100 winner in powerball. So lets say I lose 1500 over a lifetime. BFD. And I don't think I'll buy that many over my life. If I hit OTOH...... well the thought makes me shudder how cool it would be. /images/graemlins/cool.gif

[Iceman]

[ QUOTE ]
the texas state lottery is up to $120 million today. if the odds are about 50 million:1 then it seems like its a +ev gamble but only if you can scoop the pot. if you have to split it then you've lost money.

either way, i'm going to buy my first lottery ticket tonight.

[/ QUOTE ]

It's almost never plus-EV:

1. You only get the money in installments over 20-30 years, which vastly reduces its value.
2. Taxes will take a lot of it; as much as half depending on where you live.
3. When the jackpot is large, your chance of scooping is much reduced.

[RollaJ]

You would get roughly $35,000,000 after taxes and figuring present value. So you are getting 35,000,000 to 1 on a 50,000,000 shot. That is not EV. That being said however, typing all those zeros has convinced me to go buy some tickets. /images/graemlins/grin.gif

[mosta]

[ QUOTE ]
It's almost never plus-EV:


[/ QUOTE ]

I've never searched out the details, but haven't at various times groups made a good return trying to buy out the lottery (all numbers) when the return way outran the odds? I always heard about "the Australian lottery", it being done there several times, supposedly, I guess?? Maybe I'll try to look it up right now...

[Iceman]

[ QUOTE ]
[ QUOTE ]
It's almost never plus-EV:


[/ QUOTE ]

I've never searched out the details, but haven't at various times groups made a good return trying to buy out the lottery (all numbers) when the return way outran the odds? I always heard about "the Australian lottery", it being done there several times, supposedly, I guess?? Maybe I'll try to look it up right now...

[/ QUOTE ]

Only if you had a jackpot that carried over so many times that it was much greater than the odds of hitting it, and despite that wasn't so heavily played that any win was likely to be split (which might be the case in a sparsely populated Australian state, but definitely not in the US).

[pzhon]

[ QUOTE ]
Only if you had a jackpot that carried over so many times that it was much greater than the odds of hitting it, and despite that wasn't so heavily played that any win was likely to be split (which might be the case in a sparsely populated Australian state, but definitely not in the US).

[/ QUOTE ]

Good points. Stefan Mandel (http://www.betasia.com/betasia/articles.asp?ID=7&language=) helped to organize groups that bought a large fraction of the combinations of several lotteries. The targets included at least one lottery in the U.S., but I believe most were in New Zealand, which has a population of only 4 million people (plus a lot of sheep). I believe the New Zealand lotteries were good because a higher fraction of the price of a ticket went toward the jackpot and New Zealand is isolated. It's hard to check the details since this predated most of the web.

Lotteries in the U.S. are generally not good targets because of the ease with which people can cross state lines to buy tickets when the jackpot is large. Also, the poor payout systems waste a large fraction of the money that is supposed to be spent on jackpots, and gambling winnings are taxable.

I wouldn't assume Stefan Mandel's approach to the lotteries was actually +EV. He also offered worthless systems for choosing lottery tickets if you only wanted to buy a few hundred thousand; his systems actually offered the lowest possible return with the highest variance, the opposite of what I would want. He went bankrupt.

For a bit more analysis, see this older thread (http://forumserver.twoplustwo.com/showflat.php?Cat=&Number=682729&Main=677669). I wouldn't be surprised if there were +EV lottery opportunities on a regular basis, but they probably will not come from the largest jackpots.

[namknils]

State Lottery = A tax on the stupid.

No offense. /images/graemlins/shocked.gif

[CORed]

I don't play state lotteries as a matter of principal. Most state lotteries only pay out 50% of sales in prizes. IMO, this is a ripoff and I won't support it. Also, consider that the $120 million is probably paid out over 20 years or something like that. The cash equivalent is considerably less than $120 million.

[lunchmeat]

William Ziemba (the guy who created the horse racing system), wrote an article on this. I can't find a link to the article, but basically he found that some progressive jackpot lotteries have +EV bets, but the odds of hitting the jackpot are so remote that it would take millions of dollars (and I think millions of years too) in order to be able to take advantage of it.

So even if you do find +EV lottery bets they aren't worth making.

[Thythe]

[ QUOTE ]
State Lottery = A tax on the stupid.

No offense. /images/graemlins/shocked.gif

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namknils, this is just an ignorant and naive post by you. If perhaps you had read the previous posts or done some research, you would see that there are +EV opportunities, they do exist, guaranteed. I personally do not play the lottery, but I know that +EV opportunities exist. Usually they are found in smaller lotteries that still have a rollover. Once it gets over a certain amount, it can become +EV. This amount "X" is of course going to be based on the odds, the number of tickets expected to be sold, etc. But it does happen.

[Nemesis]

I do agree with... well this 1 dollar... it'll buy me a coke... this 60 mil (after taxes/lump sum) will buy a lot of coke /images/graemlins/wink.gif