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Recently here in the USA, it briefly made economic sense to buy a
lottery ticket. Something normally used as a tax on poor
mathematical skills briefly became a less insane way to waste a
dollar, with the jackpot increasing to the point where payout post
taxes exceeded the odds of losing.
Kickstarter
is a website for financing things by soliciting small
pledges from folks, which are only collected if the full sum originally
set out has been pledged.
In this case, one could raise 173 million dollars to buy every lottery
number as soon as the payout exceeds the odds.
Every investor would receive a return on their investment
proportional to their buy-in.
Plus, since payouts rarely exceed odds, you will probably earn a few
months at least of interest on that giant wad of cash, making the
enactor of the plan the real winner.
Relevant.
http://www.nytimes....ed-in-virginia.html
[2 fries shy of a happy meal, Mar 31 2012]
More on the NYTimes story
http://www.nytimes....gewanted=all&src=pm
[hippo, Apr 02 2012]
[link]
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//one could raise 173 million dollars to buy every
lottery number as soon as the payout exceeds the
odds.// |
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Are there only a finite number of tickets? If not,
won't other people also buy tickets, thereby diluting
the winnings? |
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The possible winning combinations are limited. Multiple
winners may indeed dilute the jackpot. However, this could
effectively be downplayed in the appeal for money, eg "if
the odds of winning are 1/173m , what are the odds of
TWO winners??!?" |
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It would rely on smart marketing and dumb
customers, but neither of those is an obstacle. |
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//Multiple winners may indeed dilute the
jackpot.//
This is a sure thing, right? With no possibility of
losing money? So, how many consortia will there be,
all buying every number? |
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//if the odds of winning are 1/173m , what are the odds of TWO winners??!?// Evidently pretty good, because three people just won the jackpot. |
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//Are there only a finite number of tickets? If not, won't other people also buy tickets, thereby diluting the winnings?// |
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Once the "lottery winning kick starter" kicks in, additional lottery winning kick starters may start up. These could continue until the winnings are diluted to a point where it's not worthwhile to add yet another kick starter. But unless each is announced, nobody knows how much the dilution has increased. |
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//nobody knows how much the dilution has
increased//
Until, at equilibrium, *everybody*
knows how much it's increased: exactly enough to
make the expected profit zero. You can profit from
this if if you have knowledge that the
market
hasn't equilibrated yet, and if that fact isn't
generally known. |
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Unless, of course, it's generally known that the fact
isn't generally known. |
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//generally known that the fact isn't generally
known// That's beyond Delphic. It's positively
Rumsfeldian. |
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//enough to make the expected profit zero.// |
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This is what happens when I buy a lottery ticket. Okay, I expected to win it all, but my profit is zero. Ain't that a kickstart in the head. |
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// In this case, one could raise 173 million dollars to buy
every lottery number as soon as the payout exceeds the
odds.
// |
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I heard a University of
Georgia mathemetician saying almost exactly the same
thing on All Things Considered (NPR) two days ago. |
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It is odd, isn't it, that putting anything about the odds of winning versus cost of a ticket into words is so difficult. No wonder so many people play. |
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Not that none of them understand, mind, but many don't. |
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This lottery indeed had multiple winners. Three, I think, in three different parts of the country, will be`splitting the prize. |
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This actually mostly makes sense to me. Except for one problem. I recently read that to fill out the cards to buy every single ticket combination would take 28 years. So there would absolutely need to be some automated way to purchase all those tickets. Even an army of people buying them wouldn't work because you'd have to pay them per hour. |
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I'd challenge the tax on poor math skills conception (tax
on poor maybe, if a tax at all). Poor numeracy can lead to
false hope, but lottery tickets really promise a better
chance of return than most anything a person buys. I've
been buying bread every week for years and have not once
discovered precious gemstones suspended therein. In fact
it's'so unlikely that large quantities of cash will be found in
most things that they don't even bother to call them
lotteries. |
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My view on lotteries has always been that someone is going to win, so it might as well be me. |
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The Missouri lottery based an advertising campaign around that, [DrBob]. |
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To maximise earnings, such a consortium probably shouldn't buy every possible ticket.
I don't know what the format of your lottery is, but in general people fail to make a random selection of numbers - favouring those at the low end. For example, people picking birthdays will have numbers in the range 1..12 and 1..31 (with a 50% bias away from 31, and a smaller bias away from 29 and 30).
This means that tickets with low numbers on are more likely to result in diluted winnings (due to a shared jackpot). Thus, these tickets are less valuable, and should be avoided (unless the payout:input ratio multiple is high enough). |
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