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Finding good bets in the lottery, and why you shouldn't take them

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  • Aaron Abrams
  • Skip Garibaldi

Abstract

We give a criterion under which the expected return on a ticket for certain large lotteries is positive. In this circumstance, we use elementary portfolio analysis to show that an optimal investment strategy includes a very small allocation for such tickets.

Suggested Citation

  • Aaron Abrams & Skip Garibaldi, 2025. "Finding good bets in the lottery, and why you shouldn't take them," Papers 2507.01993, arXiv.org.
    • Handle: RePEc:arx:papers:2507.01993
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    1. L. C. MacLean & W. T. Ziemba & G. Blazenko, 1992. "Growth Versus Security in Dynamic Investment Analysis," Management Science, INFORMS, vol. 38(11), pages 1562-1585, November.
    2. Victor Matheson, 2001. "When Are State Lotteries a Good Bet (Revisited)?," Eastern Economic Journal, Eastern Economic Association, vol. 27(1), pages 55-70, Winter.
    3. Kent R. Grote & Victor A. Matheson, 2006. "In Search of a Fair Bet in the Lottery," Eastern Economic Journal, Eastern Economic Association, vol. 32(4), pages 673-684, Fall.
    4. Lawrence J. Kaplan & James M. Maher, 1970. "The Economics of the Numbers Game," American Journal of Economics and Sociology, Wiley Blackwell, vol. 29(4), pages 391-408, October.
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