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Algorithm for Detection of Illegal Discounting in North Carolina Education Lottery

Author

Listed:
  • Jiayi Fu

    (The University of North Carolina at Chapel Hill)

  • Jack Prothero

    (The University of North Carolina at Chapel Hill)

  • Jan Hannig

    (The University of North Carolina at Chapel Hill)

Abstract

The lottery is a very lucrative industry. Popular fascination often focuses on the largest prizes. However, less attention has been paid to detecting unusual lottery buying behaviors at lower stakes. Our paper introduces a new model to detect illegal discounting in the North Carolina Education Lottery using statistical analysis of net gains and ticket buying habits. Nine outlying players are flagged and are further examined using a proposed stochastic model to calculate the range of their possible losses in the lottery. The unusual buying patterns of the players flagged as outliers are further confirmed using a K-means clustering analysis of lottery store visiting behaviors.

Suggested Citation

  • Jiayi Fu & Jack Prothero & Jan Hannig, 2024. "Algorithm for Detection of Illegal Discounting in North Carolina Education Lottery," Sankhya B: The Indian Journal of Statistics, Springer;Indian Statistical Institute, vol. 86(1), pages 224-240, May.
    • Handle: RePEc:spr:sankhb:v:86:y:2024:i:1:d:10.1007_s13571-024-00323-1
    DOI: 10.1007/s13571-024-00323-1
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    References listed on IDEAS

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    1. Jonathan Guryan & Melissa S. Kearney, 2005. "Lucky Stores, Gambling, and Addiction: Empirical Evidence from State Lottery Sales," NBER Working Papers 11287, National Bureau of Economic Research, Inc.
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