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Does it pay to buy the pot in the Canadian 6/49 Lotto: implications for lottery design

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  • Moffitt, Steven D.
  • Ziemba, William T.

Abstract

The Canadian 6/49 Lotto©, despite its unusual payout structure, is one of the few government sponsored lotteries that has the potential for a favourable strategy we call "buying the pot". By "buying the pot" we mean that a syndicate buys one of each ticket in the lottery, ensuring that it holds a jackpot winner. We assume that the other bettors independently buy small numbers of tickets. This paper presents (1) a formula for the syndicate's expected return, (2) conditions under which buying the pot produces a significant positive expected return, and (3) the implications of these findings for lottery design.

Suggested Citation

  • Moffitt, Steven D. & Ziemba, William T., 2017. "Does it pay to buy the pot in the Canadian 6/49 Lotto: implications for lottery design," LSE Research Online Documents on Economics 70755, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:70755
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    File URL: http://eprints.lse.ac.uk/70755/
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    References listed on IDEAS

    as
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    4. Milton Friedman & L. J. Savage, 1948. "The Utility Analysis of Choices Involving Risk," Journal of Political Economy, University of Chicago Press, vol. 56(4), pages 279-279.
    5. Thaler, Richard H & Ziemba, William T, 1988. "Parimutuel Betting Markets: Racetracks and Lotteries," Journal of Economic Perspectives, American Economic Association, vol. 2(2), pages 161-174, Spring.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    monetary policy; quantitative easing; financial stability; financial fragility; shadow banking; maturity transformation; carry trades;
    All these keywords.

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates

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