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Doesn't that mean that the lottery was losing money? How is that even possible?

by S4M 11y ago

jib 11y ago
It's related to jackpots, so no. Lets say a lottery is set up to pay out 60% of money in over a year, but those payouts are done by 40% 9 weeks out of 10, and 240% the 10th week. If you only play the lottery on the 10th week, then your EV is +140%, even though the overall EV is still 60%. From the article it was a version of this that happened.
eloisant 11y ago
If I understand correctly, when there is no winner the prize is rolled over the next day. The technique involves playing these days specifically, and getting a big enough coverage of the numbers. That means that if the (global) prize becomes big enough, then for this day the lottery gives out more money that it cashed, but it's actually money they accumulated during the days there was no grand prize winner. So in average the lottery doesn't lose money.
deleted 11y ago
[deleted]
balabaster 11y ago
I'm quite sure this scenario was modeled extensively and they were well aware of it and had worked to ensure they were still profitable (or perhaps more so) even if the flaw was exploited.
- qbrass 11y ago
  The state takes their money off the top, and the rest goes towards the jackpot. They make money as long as people play the game. They might have made more money by hyping the higher jackpot to get more ticket sales, but it obviously wasn't worth their time. The people rushing to buy tickets because of that jackpot have the same chances of winning as they would without MIT students buying tickets. They have a reduced amount of time to try and win it, since MIT winning will lower the jackpot, but they're probably better off for it by not throwing their money at the game as much. The people really losing out are the ones who buy tickets no matter what the jackpot is, and that's only if they win after the jackpot has been lowered. They may have won more money, but if that was their concern, they shouldn't have been playing when the payout was so low.

Doesn't that mean that the lottery was losing money? How is that even possible?

by S4M 11y ago

Doesn't that mean that the lottery was losing money? How is that even possible?

jib 11y ago

It's related to jackpots, so no. Lets say a lottery is set up to pay out 60% of money in over a year, but those payouts are done by 40% 9 weeks out of 10, and 240% the 10th week. If you only play the lottery on the 10th week, then your EV is +140%, even though the overall EV is still 60%. From the article it was a version of this that happened.

eloisant 11y ago

If I understand correctly, when there is no winner the prize is rolled over the next day. The technique involves playing these days specifically, and getting a big enough coverage of the numbers. That means that if the (global) prize becomes big enough, then for this day the lottery gives out more money that it cashed, but it's actually money they accumulated during the days there was no grand prize winner. So in average the lottery doesn't lose money.

deleted 11y ago

[deleted]

balabaster 11y ago

I'm quite sure this scenario was modeled extensively and they were well aware of it and had worked to ensure they were still profitable (or perhaps more so) even if the flaw was exploited.

qbrass 11y ago
The state takes their money off the top, and the rest goes towards the jackpot. They make money as long as people play the game. They might have made more money by hyping the higher jackpot to get more ticket sales, but it obviously wasn't worth their time. The people rushing to buy tickets because of that jackpot have the same chances of winning as they would without MIT students buying tickets. They have a reduced amount of time to try and win it, since MIT winning will lower the jackpot, but they're probably better off for it by not throwing their money at the game as much. The people really losing out are the ones who buy tickets no matter what the jackpot is, and that's only if they win after the jackpot has been lowered. They may have won more money, but if that was their concern, they shouldn't have been playing when the payout was so low.