In Search of a Fair Bet in the Lottery
AbstractAlthough state-operated lotto games have the worst average expected payoffs among common games of chance, because the jackpot can accumulate, the maximum expected payoff is potentially unlimited. It is possible, therefore, that lotto can exhibit a positive expected return. This paper examines 18,000 drawings in 34 American lotteries and finds approximately 1% of these drawings provided players with a fair bet. Furthermore, if it were possible for a bettor to purchase every possible combination, most lotteries commonly experience circumstances where such a purchase would provide a positive return with 11% of the drawings providing a fair bet to the player.
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Bibliographic InfoPaper provided by Department of Economics, Williams College in its series Department of Economics Working Papers with number 2003-16.
Length: 26 pages
Date of creation: Aug 2003
Date of revision:
Publication status: published in Eastern Economic Journal, Vol. 32:4 (Fall 2006), 673- 684.
Other versions of this item:
- Victor Matheson & Kent Grote, 2004. "In Search of a Fair Bet in the Lottery," Working Papers, College of the Holy Cross, Department of Economics 0401, College of the Holy Cross, Department of Economics.
- D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
- H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
- L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism
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