# National Lottery

digitalbeachbum
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National Lottery

I stumbled across this video about a National Lottery discussion on FOX news. No I normally don't watch FOX but Google searches can take you almost anywhere.

The one commenter says that the recent PowerBall lottery produced only 500 million to help pay off our national debt, but his comments are ignorant. There is also a comment that states would be hurting because people would rather purchase tickets to the national lottery than the state lottery but this I believe is hyperbole.

The Powerball lottery produces 40 million for the first week of play, but that is only 1/3rd of what was taken in as 2/3rds of total ticket sales goes towards the states which are a part of the lottery. States get different percentages based on the ticket sales of that state.

As a lottery pot grows, so does the revenue for each state. Take for example the recent Powerball which reached over 550 million dollars.

Week 1 - 40 million pot - 80 million towards states

Week 2 - 50 million pot - 20 million towards states

Week 3 - 60 million pot - 20 million toward states

Week 4 - 70 million pot - 20 million toward states

Week 5 - 80 million pot - 20 million toward states

Week 6 - 90 million pot - 20 million toward states

Week 7 - 100 million pot - 20 million toward states

Week 8 - 110... 20 million to states

Week 9 - 124... 28 million to states

Week 10 - 143... 38 million to states

Week 11 - 168... 50 million to states

Week 12 - 185... 34 million

Week 13 - 214... 29

Week 14 - 250... 36

Week 15 - 325... 75

Week 16 - 550... 225

These are rough estimates. It doesn't take in to account people who pay for the extra \$1 for the "power play".

The total take for the 16 weeks is \$1,310,000,000.

If you take in to account an average haul, in one year you are looking at around 3-4 billion a year towards the national debt. Then you can also include the amount of interest saved compounded monthly.

You could also increase revenue by changing the way the lottery works. If you had a higher percentage of winners you would have more ticket sales.

The most profitable form of lottery is "block sales". When you purchase a ticket you are put in to a block with X number of ticket holders. If one ticket wins in that block then EVERY ONE in that block gets a piece of the action. If you have 50 million in the pot then you get (50) 1 million dollar winners.

Do the drawings twice a week and you would have (100) 1 million dollar winners each week.

As the pot grows you have the government earning interest off the pot, plus they get 2/3rds of profits from ticket sales.

In less than 10 years the government could earn over 1.5 to 2 trillion dollars.

Yes, this isn't the complete answer to our financial problems, but it could answer the problem of additional revenue.

GodsUseForAMosquito
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Why not just tax everyone

Why not just tax everyone the cost of one lottery ticket a week extra? That way you wouldn't need to pay anything out and it would solve financial problems even quicker. That's essentially all you're doing, except limiting it to those naive enough to buy lottery tickets (and making it an 'optional' tax for the poor.. who buy the most lottery tickets).

Does higher tax solve financial problems? Does increasing tax on the poor?

digitalbeachbum
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GodsUseForAMosquito

GodsUseForAMosquito wrote:

Why not just tax everyone the cost of one lottery ticket a week extra? That way you wouldn't need to pay anything out and it would solve financial problems even quicker. That's essentially all you're doing, except limiting it to those naive enough to buy lottery tickets (and making it an 'optional' tax for the poor.. who buy the most lottery tickets).

Does higher tax solve financial problems? Does increasing tax on the poor?

There is a difference.

As a person who plays lotto I purchase a \$1 ticket per drawing, but for 20-24 weeks. So I spend \$20-24 for roughly three or four months. During the year I spend no more than \$100.

This is voluntary, it's partially entertainment and it also has a payout.

A tax, which would be fair if every one paid it and no one got any "special considerations", would be fair but I don't get any entertainment nor is their a payout.

Do the poor pay more for lotto? Define poor? I believe more middle class people play the lotto than the poor.

EXC
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Why wouldn't the politicians

Why wouldn't the politicians just use the extra money to fund entitlements and tax breaks? Isn't that the game pass out favors for votes? So we'd be back at square one.

The lottery is a just surtax on stupidity.

Taxation is the price we pay for failing to build a civilized society. The higher the tax level, the greater the failure. A centrally planned totalitarian state represents a complete defeat for the civilized world, while a totally voluntary society represents its ultimate success. --Mark Skousen

GodsUseForAMosquito
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The poor

The poor and less educated play lotteries the most as far as I understand it..

Here's some papers on the subject:

Here's an article from the UK also supporting this claim:

Here's another report for The D.C., Maryland and Virginia lotteries by the Washington Post:

EDIT: I'd define poor as having a 4 person household income <\$23,000 - This is how it's roughly defined by your Census Bureau guidelines (the table at http://en.wikipedia.org/wiki/Poverty_in_the_United_States#Recent_poverty_rate_and_guidelines adjusts for household members)

digitalbeachbum
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GodsUseForAMosquito

GodsUseForAMosquito wrote:

The poor and less educated play lotteries the most as far as I understand it..

Here's some papers on the subject:

Here's an article from the UK also supporting this claim:

Here's another report for The D.C., Maryland and Virginia lotteries by the Washington Post:

EDIT: I'd define poor as having a 4 person household income <\$23,000 - This is how it's roughly defined by your Census Bureau guidelines (the table at http://en.wikipedia.org/wiki/Poverty_in_the_United_States#Recent_poverty_rate_and_guidelines adjusts for household members)

I find it interesting that when you see stories of people winning the lotto it tends to favor middle class. I rarely see slum, poor people winning. Yeah, there are a few here and there, but most of them seem well off already.

Of course, you get a sprinkling of rich people too.

digitalbeachbum
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EXC wrote:Why wouldn't the

EXC wrote:

Why wouldn't the politicians just use the extra money to fund entitlements and tax breaks? Isn't that the game pass out favors for votes? So we'd be back at square one.

The lottery is a just surtax on stupidity.

I disagree. I'm sure there are some pretty smart people who play the lotto. I'm one of them.

Beyond Saving
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digitalbeachbum wrote:In

digitalbeachbum wrote:

In less than 10 years the government could earn over 1.5 to 2 trillion dollars.

Yes, this isn't the complete answer to our financial problems, but it could answer the problem of additional revenue.

And in the same 10 years our government will ring up 15-20 trillion in debt at current spending levels making the 2 trillion in revenue irrelevant. I'm all for taxing the mathematically challenged but don't pretend it is any kind of serious solution to our budget problems. \$2 trillion sounds like a lot of money but compared to our national budget over 10 years it is piss in the wind. A serious solution needs to be far more dramatic. We either need to cut spending drastically or tax every single American at about 40%.

If, if a white man puts his arm around me voluntarily, that's brotherhood. But if you - if you hold a gun on him and make him embrace me and pretend to be friendly or brotherly toward me, then that's not brotherhood, that's hypocrisy.- Malcolm X

digitalbeachbum
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Beyond Saving

Beyond Saving wrote:

digitalbeachbum wrote:

In less than 10 years the government could earn over 1.5 to 2 trillion dollars.

Yes, this isn't the complete answer to our financial problems, but it could answer the problem of additional revenue.

And in the same 10 years our government will ring up 15-20 trillion in debt at current spending levels making the 2 trillion in revenue irrelevant. I'm all for taxing the mathematically challenged but don't pretend it is any kind of serious solution to our budget problems. \$2 trillion sounds like a lot of money but compared to our national budget over 10 years it is piss in the wind. A serious solution needs to be far more dramatic. We either need to cut spending drastically or tax every single American at about 40%.

I believe that we will never reach 15-20 trillion. Also, I agree that both spending cuts are needed.

We need to get rid of a bunch of free loading asshole senators and congress-people who are dead weight.

EXC
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digitalbeachbum wrote:EXC

digitalbeachbum wrote:

EXC wrote:

Why wouldn't the politicians just use the extra money to fund entitlements and tax breaks? Isn't that the game pass out favors for votes? So we'd be back at square one.

The lottery is a just surtax on stupidity.

I disagree. I'm sure there are some pretty smart people who play the lotto. I'm one of them.

Why even if you wanted to do high risk investing, there are plenty of other avenues to would produce a much higher expected return rate. It's a scam.

Taxation is the price we pay for failing to build a civilized society. The higher the tax level, the greater the failure. A centrally planned totalitarian state represents a complete defeat for the civilized world, while a totally voluntary society represents its ultimate success. --Mark Skousen

digitalbeachbum
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EXC wrote:digitalbeachbum

EXC wrote:

digitalbeachbum wrote:

EXC wrote:

Why wouldn't the politicians just use the extra money to fund entitlements and tax breaks? Isn't that the game pass out favors for votes? So we'd be back at square one.

The lottery is a just surtax on stupidity.

I disagree. I'm sure there are some pretty smart people who play the lotto. I'm one of them.

Why even if you wanted to do high risk investing, there are plenty of other avenues to would produce a much higher expected return rate. It's a scam.

I disagree. Winning at the lottery can have many different forms. #1 is that it acts as a form of entertainment. #2 you might just win something from it. #3 There are ways to increase your chances of winning.

GodsUseForAMosquito
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i would like to hear how

i would like to hear how you'd improve your chances of winning, because apart from increasing your stake or lowering your returns i can't think of any, and doing the maths doesn't make either of these options more beneficial.

digitalbeachbum
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GodsUseForAMosquito

GodsUseForAMosquito wrote:

i would like to hear how you'd improve your chances of winning, because apart from increasing your stake or lowering your returns i can't think of any, and doing the maths doesn't make either of these options more beneficial.

Actually the process increases your chance on a larger pay out.

If I purchase tickets in a lottery which has a "mega ball" type situation, the payouts are usually based on the number of correct numbers picked plus the mega ball. The idea is that you purchase a block of numbers which are the same while one or two other numbers are different.

I started doing this several years ago and my payouts have increased. I spend about double the money I normally would have paid but my payouts have increased by a factor of three.

The last lottery I purchased 35 tickets. I won \$7 per ticket. I spent \$70. My profit was \$175.

I also prefer to play the smaller lottery games which have a smaller payout but greatly increased odds. I do this once a month and while I don't always win, per year, I come out ahead.

My goal is to get three numbers correct on Megaball here in Florida

If I spent \$22 I can win \$50 per ticket giving me \$1100. The best I've done though is 2 of 4 giving me \$44. I do this quite often too. I can pay for my tickets and also pay for the next batch. Plus I run the risk of winning a large jackpot.

And I give you this to read...

GodsUseForAMosquito
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While I'm unfamiliar with

While I'm unfamiliar with the nuances of the US's alternative lotto game types, your method of buying batches of numbers with mostly similar numbers in them is flawed if you're expecting a net positive return, I think.

Yes, it increases your payout if you win, but because you have fewer discrete numbers in play, the chances of winning are lower, so over time you'll win less often than if you had different numbers on each line. If you come out ahead, that's lucky, but it's not the expected return.

The last link you posted actually confirms this in one of its final paragraphs:

"So why do I still buy lottery tickets? Definitely not for the expected monetary return on investment. I think of it as a discretionary entertainment spend."

Do you keep a log of expenses against payouts over the years you've been playing? It would be really interesting to see if you do.. over several years, can you show a net positive return (without having won any major, statistically improbable prizes) ?

If you don't, it would be an interesting little project to start..

digitalbeachbum
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GodsUseForAMosquito

GodsUseForAMosquito wrote:

While I'm unfamiliar with the nuances of the US's alternative lotto game types, your method of buying batches of numbers with mostly similar numbers in them is flawed if you're expecting a net positive return, I think.

Yes, it increases your payout if you win, but because you have fewer discrete numbers in play, the chances of winning are lower, so over time you'll win less often than if you had different numbers on each line. If you come out ahead, that's lucky, but it's not the expected return.

The last link you posted actually confirms this in one of its final paragraphs:

"So why do I still buy lottery tickets? Definitely not for the expected monetary return on investment. I think of it as a discretionary entertainment spend."

Do you keep a log of expenses against payouts over the years you've been playing? It would be really interesting to see if you do.. over several years, can you show a net positive return (without having won any major, statistically improbable prizes) ?

If you don't, it would be an interesting little project to start..

It's not flawed since I've been winning. No, not huge gains, but still winning.

I cycle my numbers and keep track of numbers which have already won. For example, I pick numbers which have rarely are drawn together. I feel this increases my chances. If I win one month with the numbers 1,2,3,4,5 I cycle next month to 10,11,12,13,14 etc.

Time will tell if I eventually lose, but for now I'm ahead of the game (since I started this process).

As I stated before, the entertainment value is why I do it; plus the possible big jackpot.

I do keep a log which is how I track my numbers. I have gained a small profit over the last two years, but honestly, before I started doing this I never won. I'm still trying to catch up since I've been playing when the lotto first started here.

Beyond Saving
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The statistician also

The statistician also failed to take taxes into account- you spend the \$54 million to purchase every possible line and you won't actually get \$70 million even if you were lucky enough to be the only jackpot winner. Your actual ROI would be roughly \$40 million so a \$14 million "profit" has suddenly turned in to a \$14 million loss. Similarly, his calculation that one can have only the small loss of \$1.15 ROI for every \$1.20 spent is fundamentally flawed because it doesn't take the reality of taxes into account when a person does win the larger jackpots. Although he is correct that the entertainment has value and if that is what you are looking for at least with lottery tickets there is a small chance that you will hit a big jackpot and come out ahead financially. Many other forms of entertainment are guaranteed financial losses.

If, if a white man puts his arm around me voluntarily, that's brotherhood. But if you - if you hold a gun on him and make him embrace me and pretend to be friendly or brotherly toward me, then that's not brotherhood, that's hypocrisy.- Malcolm X

GodsUseForAMosquito
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In the UK it's tax-free -

In the UK it's tax-free - I think he's Australian... might also be tax-free...

GodsUseForAMosquito
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digitalbeachbum wrote:I

digitalbeachbum wrote:

I cycle my numbers and keep track of numbers which have already won. For example, I pick numbers which have rarely are drawn together. I feel this increases my chances. If I win one month with the numbers 1,2,3,4,5 I cycle next month to 10,11,12,13,14 etc.

Ok, if you play it for fun, that's fine - I'm more interested in the probability question. You can still win with a flawed system, that's just luck. But you shouldn't 'expect' to make gains over time with a flawed system.

Just because a number has come up often in the past doesn't mean it's less likely to come up in the future.. if I flip a balanced coin ten times, and it comes up heads each time, when I flip it again is it more likely to come up tails? No, the chance is still 50:50.

I note you said "I feel this increases my chances" rather than stating it as a fact, but as a rational person I feel the need to call you on your irrationality in this instance.

Beyond Saving
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GodsUseForAMosquito

GodsUseForAMosquito wrote:

In the UK it's tax-free - I think he's Australian... might also be tax-free...

Yes, just looked in the about section of the blog and he is from Australia and a quick google it appears that lottery winnings are not taxed in Australia so I withdraw my criticism of the statistician, although it is still an issue attempting to transfer his calculations to the American lottery which is taxed as income at the federal level and additional taxes in most states and many cities.

If, if a white man puts his arm around me voluntarily, that's brotherhood. But if you - if you hold a gun on him and make him embrace me and pretend to be friendly or brotherly toward me, then that's not brotherhood, that's hypocrisy.- Malcolm X

EXC
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digitalbeachbum wrote:EXC

digitalbeachbum wrote:

EXC wrote:

digitalbeachbum wrote:

EXC wrote:

Why wouldn't the politicians just use the extra money to fund entitlements and tax breaks? Isn't that the game pass out favors for votes? So we'd be back at square one.

The lottery is a just surtax on stupidity.

I disagree. I'm sure there are some pretty smart people who play the lotto. I'm one of them.

Why even if you wanted to do high risk investing, there are plenty of other avenues to would produce a much higher expected return rate. It's a scam.

I disagree. Winning at the lottery can have many different forms. #1 is that it acts as a form of entertainment. #2 you might just win something from it. #3 There are ways to increase your chances of winning.

The problem is even if you win the big jackpot, the government takes most of it back. They don't pay the big jackpot immediately. So after taxes and everything, the government keeps 80% of all the money bet, the players get back only around 20%.

Suppose you go to Vegas and bet on sports. The casino keeps about 5% of the money bet. If you keep all your bets under \$1000, the government never knows about your winnings. So if you want to win a powerball type jackpot from \$1, just pick 28 winners in a row, rebetting your winnings everytime.

Taxation is the price we pay for failing to build a civilized society. The higher the tax level, the greater the failure. A centrally planned totalitarian state represents a complete defeat for the civilized world, while a totally voluntary society represents its ultimate success. --Mark Skousen

digitalbeachbum
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GodsUseForAMosquito

GodsUseForAMosquito wrote:
Ok, if you play it for fun, that's fine - I'm more interested in the probability question. You can still win with a flawed system, that's just luck. But you shouldn't 'expect' to make gains over time with a flawed system.

Just because a number has come up often in the past doesn't mean it's less likely to come up in the future.. if I flip a balanced coin ten times, and it comes up heads each time, when I flip it again is it more likely to come up tails? No, the chance is still 50:50.

I note you said "I feel this increases my chances" rather than stating it as a fact, but as a rational person I feel the need to call you on your irrationality in this instance.

Yep, entertainment first and money second. I used to do quick picks but switched because there is more fun in trying to pick the numbers.

I don't expect much in the way of gains, but flipping a coin is only 50/50. My system is worse than those odds. I think I'm hovering around 800 to 1. Those are terrible odds.

I don't feel that two years worth of stats are any thing to say I have a system. I only play once a month, maybe a little more per year if there is a big pot. The only thing I'm trying to do is not repeat previous numbers in case I get like four or give numbers. I wouldn't want to play them again, they won't come up again during my lifetime.

BTW - I've checked the lottos I play and beyond three numbers there has never been a repeat of four, five or six numbers.

digitalbeachbum
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EXC wrote: The problem is

EXC wrote:

The problem is even if you win the big jackpot, the government takes most of it back. They don't pay the big jackpot immediately. So after taxes and everything, the government keeps 80% of all the money bet, the players get back only around 20%.

Suppose you go to Vegas and bet on sports. The casino keeps about 5% of the money bet. If you keep all your bets under \$1000, the government never knows about your winnings. So if you want to win a powerball type jackpot from \$1, just pick 28 winners in a row, rebetting your winnings everytime.

I totally agree with you which is why I use blocks when picking numbers. Any thing over \$5000 is taxable and if I can keep it small enough then I don't ever have to pay taxes. So if I have 35 tickets which are all \$250 winners then I won't pay taxes on them because I can cash them in separately.