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Not a "win" in the financial aspect of the game: "... they matched just two balls on three of the tickets, the reward being three lucky dip tries on a subseque

Not a "win" in the financial aspect of the game: "... they matched just two balls on three of the tickets, the reward being three lucky dip tries on a subsequent lottery, each of which came to nothing. Since a ticket costs £2, the experiment represented a loss to the authors of £54. This unfortunate incident therefore serves both as a verification of our result and of the principle that one should expect to lose money when gambling."

acomjean 3y ago
When I was young I had a friend who bought one Massachusetts (US) lottery ticket a week. I remember he "won" (basically got his money back). When he went to cash out the cashier asked him, "do you want the money.. or another ticket". He took the another ticket and promptly lost. lesson learned. You can't win if you don't play, but 2 tickets doesn't increase your odds significantly. Where I worked there was a convenience store store. I got to know the owners a bit. One day they were posting a sign "People at our store won $850,000 on the lottery last year". I said, "wow thats a lot". She turned, shook her head and said "I know what they've spent... its not a lot." and proceeded into a mini tirade against gambling, which she promptly stopped when a customer entered the store. Its profitiable. But in the US with sports gambling everywhere, I wonder if lotteries have lost their luster.
- forinti 3y ago
  That's the Law of Large Numbers working. A friend of mine won a small but not insignificant amount in a lottery and then "reinvested" it in the lottery and, as expected, lost it all.
- angry_moose 3y ago
  There's a few Powerball Simulators (largest US lottery) out there - simulate buying 1 ticket a week indefinitely. It usually works out to about a -90% ROI, though I did just somewhat undermine my point by hitting $2,000,000 (5 white balls + powerplay) after 246 years and becoming profitable. First time I've ever hit on one of these, I let one go for several millenia one time. http://adamlamers.com/lottery_simulator http://adamlamers.com/lottery_simulator
  - ecshafer 3y ago
    There is a point where the expected return is positive. Its around $1B or some large number like that. Sure the expected return is like 1% positive, but its positive.
    - vikingerik 3y ago
      If the jackpot splits in the case of multiple winners, it's not positive - enough tickets will be bought until the expected number of winners is more than one and the expected value is no longer positive.
    - angry_moose 3y ago
      Only if you don't factor in taxes and multiple winners. This article added in sales numbers to estimate the actual expected value and it peaks around a $500 million jackpot with an expected value of $.85 from a $2.00 ticket. (very close to the bottom) https://bigthink.com/starts-with-a-bang/math-of-powerball/ https://bigthink.com/starts-with-a-bang/math-of-powerball/
      - panarky 3y ago
        You can use the Kelly Criterion [0] to compute the optimum bet amount given the odds, the payoff, the cost of a ticket, and the size of your bankroll. Usually the optimum bet is zero because the expected value is negative. But when the jackpot gets big enough, occasionally the Kelly Criterion will advise buying a ticket or two if your bankroll is really big, like $10 million. [0] https://en.wikipedia.org/wiki/Kelly_criterion https://en.wikipedia.org/wiki/Kelly_criterion
    - assbuttbuttass 3y ago
      How does that work? By linearity of expectation, if the expected value of buying 1 ticket is negative then the expected value of buying multiple tickets should be even more negative
      - leoedin 3y ago
- itsoktocry 3y ago
  >She turned, shook her head and said "I know what they've spent... its not a lot." and proceeded into a mini tirade against gambling, which she promptly stopped when a customer entered the store. Its profitiable. Curious, but was this surprising to you? These games are literally all designed to take in money and pay out a portion of it. They have to be profitable.
  - acomjean 3y ago
    I was surprised the payouts from a small convenience store were so high. And the spending were so high. I'm a very infrequent gambler.. When I was at IBM one of the mathemeticians had a bumper sticker on his office door. “the lottery: a tax on people who are bad at math.” or some such thing. I took it to heart.
- veritas20 3y ago
  Stated another way. National and State lotteries are the largest ongoing wealth transfer from the lower-income bracket in the US. The lotteries are overwhelming played by the lower-income and that money is used to fund a large number of things in state governments.
- beAbU 3y ago
  In your friend's case he increased his odds by 0. New ticket means a new game probably, so any prior winnings does not factor in the next game. He did increase his odds of losing everything significantly! The rational thing to do is not play again. I'm sure someone can model this with game theory or probability math for us.
- nucleardog 3y ago
  > You can't win if you don't play, but 2 tickets doesn't increase your odds significantly. Going from 0 to 1 tickets increases your odds infinitely. The spread on your possible outcomes goes from $0-0 to something like -$2 to $100m heavily weighted toward the bottom. Going from 1 ticket to 2 tickets to 40 tickets… increases your odds by a very minuscule amount. The spread on your possible outcomes is now like -$80 to $100m, still heavily weighted towards the bottom. The marginal value of every ticket after the first is basically negative. I don’t buy lottery tickets but buying _one_ makes sense to me. No more than that.

acomjean 3y ago

When I was young I had a friend who bought one Massachusetts (US) lottery ticket a week. I remember he "won" (basically got his money back). When he went to cash out the cashier asked him, "do you want the money.. or another ticket". He took the another ticket and promptly lost. lesson learned. You can't win if you don't play, but 2 tickets doesn't increase your odds significantly. Where I worked there was a convenience store store. I got to know the owners a bit. One day they were posting a sign "People at our store won $850,000 on the lottery last year". I said, "wow thats a lot". She turned, shook her head and said "I know what they've spent... its not a lot." and proceeded into a mini tirade against gambling, which she promptly stopped when a customer entered the store. Its profitiable. But in the US with sports gambling everywhere, I wonder if lotteries have lost their luster.

forinti 3y ago
That's the Law of Large Numbers working. A friend of mine won a small but not insignificant amount in a lottery and then "reinvested" it in the lottery and, as expected, lost it all.
angry_moose 3y ago
There's a few Powerball Simulators (largest US lottery) out there - simulate buying 1 ticket a week indefinitely. It usually works out to about a -90% ROI, though I did just somewhat undermine my point by hitting $2,000,000 (5 white balls + powerplay) after 246 years and becoming profitable. First time I've ever hit on one of these, I let one go for several millenia one time. http://adamlamers.com/lottery_simulator http://adamlamers.com/lottery_simulator
- ecshafer 3y ago
  There is a point where the expected return is positive. Its around $1B or some large number like that. Sure the expected return is like 1% positive, but its positive.
  - vikingerik 3y ago
    If the jackpot splits in the case of multiple winners, it's not positive - enough tickets will be bought until the expected number of winners is more than one and the expected value is no longer positive.
  - angry_moose 3y ago
    Only if you don't factor in taxes and multiple winners. This article added in sales numbers to estimate the actual expected value and it peaks around a $500 million jackpot with an expected value of $.85 from a $2.00 ticket. (very close to the bottom) https://bigthink.com/starts-with-a-bang/math-of-powerball/ https://bigthink.com/starts-with-a-bang/math-of-powerball/
    - panarky 3y ago
      You can use the Kelly Criterion [0] to compute the optimum bet amount given the odds, the payoff, the cost of a ticket, and the size of your bankroll. Usually the optimum bet is zero because the expected value is negative. But when the jackpot gets big enough, occasionally the Kelly Criterion will advise buying a ticket or two if your bankroll is really big, like $10 million. [0] https://en.wikipedia.org/wiki/Kelly_criterion https://en.wikipedia.org/wiki/Kelly_criterion
  - assbuttbuttass 3y ago
    How does that work? By linearity of expectation, if the expected value of buying 1 ticket is negative then the expected value of buying multiple tickets should be even more negative
    - leoedin 3y ago
itsoktocry 3y ago
>She turned, shook her head and said "I know what they've spent... its not a lot." and proceeded into a mini tirade against gambling, which she promptly stopped when a customer entered the store. Its profitiable. Curious, but was this surprising to you? These games are literally all designed to take in money and pay out a portion of it. They have to be profitable.
- acomjean 3y ago
  I was surprised the payouts from a small convenience store were so high. And the spending were so high. I'm a very infrequent gambler.. When I was at IBM one of the mathemeticians had a bumper sticker on his office door. “the lottery: a tax on people who are bad at math.” or some such thing. I took it to heart.
veritas20 3y ago
Stated another way. National and State lotteries are the largest ongoing wealth transfer from the lower-income bracket in the US. The lotteries are overwhelming played by the lower-income and that money is used to fund a large number of things in state governments.
beAbU 3y ago
In your friend's case he increased his odds by 0. New ticket means a new game probably, so any prior winnings does not factor in the next game. He did increase his odds of losing everything significantly! The rational thing to do is not play again. I'm sure someone can model this with game theory or probability math for us.
nucleardog 3y ago
> You can't win if you don't play, but 2 tickets doesn't increase your odds significantly. Going from 0 to 1 tickets increases your odds infinitely. The spread on your possible outcomes goes from $0-0 to something like -$2 to $100m heavily weighted toward the bottom. Going from 1 ticket to 2 tickets to 40 tickets… increases your odds by a very minuscule amount. The spread on your possible outcomes is now like -$80 to $100m, still heavily weighted towards the bottom. The marginal value of every ticket after the first is basically negative. I don’t buy lottery tickets but buying _one_ makes sense to me. No more than that.