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.
-- GutPunchLullabies, Mar 31 2012

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]

//one could raise 173 million dollars to buy every lottery number as soon as the payout exceeds the odds.//

Are there only a finite number of tickets? If not, won't other people also buy tickets, thereby diluting the winnings?
-- MaxwellBuchanan, Mar 31 2012


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??!?"
-- GutPunchLullabies, Mar 31 2012


It would rely on smart marketing and dumb customers, but neither of those is an obstacle.
-- MaxwellBuchanan, Mar 31 2012


//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?
-- mouseposture, Mar 31 2012


//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.
-- DIYMatt, Mar 31 2012


//Are there only a finite number of tickets? If not, won't other people also buy tickets, thereby diluting the winnings?//

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.
-- Amos Kito, Mar 31 2012


//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.
-- mouseposture, Mar 31 2012


Unless, of course, it's generally known that the fact isn't generally known.
-- MaxwellBuchanan, Mar 31 2012


//generally known that the fact isn't generally known// That's beyond Delphic. It's positively Rumsfeldian.
-- mouseposture, Mar 31 2012


//enough to make the expected profit zero.//

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.
-- Amos Kito, Mar 31 2012


// In this case, one could raise 173 million dollars to buy every lottery number as soon as the payout exceeds the odds. //

I heard a University of Georgia mathemetician saying almost exactly the same thing on All Things Considered (NPR) two days ago.
-- Alterother, Mar 31 2012


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.

Not that none of them understand, mind, but many don't.

This lottery indeed had multiple winners. Three, I think, in three different parts of the country, will be`splitting the prize.
-- baconbrain, Mar 31 2012


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.
-- Thread7, Apr 02 2012


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.
-- rcarty, Apr 02 2012


My view on lotteries has always been that someone is going to win, so it might as well be me.
-- DrBob, Apr 02 2012


The Missouri lottery based an advertising campaign around that, [DrBob].
-- baconbrain, Apr 02 2012


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).
-- Loris, Apr 02 2012



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