In Search of a Fair Bet in the Lottery
Although 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.
|Date of creation:||Aug 2003|
|Date of revision:|
|Publication status:||published in Eastern Economic Journal, Vol. 32:4 (Fall 2006), 673- 684.|
|Contact details of provider:|| Postal: |
Phone: 413 597 2476
Fax: 413 597 4045
Web page: http://econ.williams.edu
More information through EDIRC
|Order Information:|| Email: |
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Anthony C. Krautmann & James E. Ciecka, 1993. "When Are State Lotteries a Good Bet?," Eastern Economic Journal, Eastern Economic Association, vol. 19(2), pages 157-164, Spring.
- Victor Matheson, 2001. "When Are State Lotteries a Good Bet (Revisited)?," Eastern Economic Journal, Eastern Economic Association, vol. 27(1), pages 55-70, Winter.
- Shapira, Zur & Venezia, Itzhak, 1992. "Size and frequency of prizes as determinants of the demand for lotteries," Organizational Behavior and Human Decision Processes, Elsevier, vol. 52(2), pages 307-318, July.
- Gulley, O. David & Scott, Frank A. Jr., 1993. "The Demand for Wagering on State-Operated Lotto Games," National Tax Journal, National Tax Association, vol. 46(1), pages 13-22, March.
- Scott, Frank A, Jr & Gulley, O David, 1995. "Testing for Efficiency in Lotto Markets," Economic Inquiry, Western Economic Association International, vol. 33(2), pages 175-88, April.
- 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.
- Victor A. Matheson & Kent R. Grote, 2003. "Jacking Up the Jackpot: Are Lotto Consumers Fooled by Annuity Payments?," Public Finance Review, , vol. 31(5), pages 550-567, September.
- Kent Grote & Victor Matheson, 2006.
"Dueling Jackpots: Are Competing Lotto Games Complements or Substitutes?,"
Atlantic Economic Journal,
International Atlantic Economic Society, vol. 34(1), pages 85-100, March.
- Victor Matheson & Kent Grote, 2004. "Dueling Jackpots: Are Competing Lotto Games Complements or Substitutes?," Working Papers 0406, College of the Holy Cross, Department of Economics.
- Philip J. Cook & Charles T. Clotfelter, 1991.
"The Peculiar Scale Economies of Lotto,"
NBER Working Papers
3766, National Bureau of Economic Research, Inc.
- Clotfelter, Charles T & Cook, Philip J, 1990. "On the Economics of State Lotteries," Journal of Economic Perspectives, American Economic Association, vol. 4(4), pages 105-19, Fall.
When requesting a correction, please mention this item's handle: RePEc:wil:wileco:2003-16. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Stephen Sheppard)
If references are entirely missing, you can add them using this form.