Is the State Lottery a 'Sucker's Bet'?

In My Humble Opinion
1

I’m putting this in IMHO because I don’t think there is a definitive answer, but if there is one Mods feel free to move it to GQ instead.

In certain social situations it is not uncommon for the topic of the state-sponsored lottery to come up in casual conversation. Typically someone will make a comment that the lottery is a ‘sucker’s bet’ since the odds of winning are so low. :o In these people’s minds it’s just like ‘throwing your hard earned money right out the window’. :dubious:

While I agree that the odds of winning the state lottery are incredibly low, I don’t equate it to ‘throwing money out the window’ since there is a non-zero chance of winning a very large payout. After all, eventually someone has to win. In my mind, if there was a zero chance of winning, i.e. if the lottery was ‘fixed’, or if the payout was only $50 dollars, then it would be a sucker’s bet. But to risk $1 with the opportunity to win $10M, no matter how high the odds are, to me isn’t a sucker’s bet.

One could certainly argue that taking that $1 a week and investing it in a stock market index fund over 50 years would be a smarter and safer thing to do, but the chance of that fund being worth $10M is certainly no greater than the chance of hitting the lottery.

So in your humble opinion is playing the lottery a sucker’s bet for fools, or a cheap way to possibly win a lot of money?

In full disclosure I should mention that I can afford to spend $52 a year on the lottery and that I have started playing it regularly, although I haven’t won very much yet. :slight_smile:

2

I define a sucker’s bet as one where you have very little chance of winning, so yeah, lottery qualifies. Doesn’t mean I won’t play it if I happen to be in a lottery state, just that I know the odds, and budget accordingly. Not as much fun as a casino trip, but easier to do more often.

3

The expected value of a state lottery is much less than other forms of gambling (legal and illegal).

Most casino games are in the 90%-95% range

Most Football wagers are ~90% when you count the “juice.”

State Lottos expected value are about ~50%.

however, the payout of a lotto are “life changing” while winning $500 bucks in latest trip to the local casino is not “life changing.”

4

It’s a tax on people who are bad at math. Yeah, a sucker’s bet. That doesn’t mean you can’t have fun doing it, but don’t mistake the lottery for a sensible financial decision.

5

In Washington State Lottery Mega Millions game, five numbers are chosen from a field of 56 and one number is chosen from a field of 46.

The odds are 1/3,819,816 and 1/46. So the probability of winning the jackpot is 1/175,711,536 (or 175,711,537:1).


   n!   
r!(n-r)!

Where n = the numbers of numbers in the field, and r = the number of numbers chosen.

6

You’d be better off taking that 1 dollar to Vegas and putting it on 17, and if you win that put it all on 17, and if you win that, put it all on 17, and if you win that put it all on 17.

You’re much more likely to parlay your one dollar into a million dollars gambling at Vegas on Roulette or the craps table. So that makes the lottery a sucker’s bet.

7

Actually, at least once in history the state lottery wasn’t a sucker’s bet…in fact, just the opposite. Because of the amount the jackpot had grown to, the cost of buying literally every combination of numbers was significantly less than the jackpot. I can’t find a link to the story, cause I can’t even remember the state it happened in, but the gist of it was that a group of people noticed this, got together, pooled their money, and bought a metric ass-load of tickets.

The problem was actually getting and filling out the tickets, since it had to be done by hand. They hired some company in New York to do it for them, I guess, but something happened and they only got like 70% of the numbers, or something like that, by the time of the drawing. They still won, though, IIRC.

8

So if the jackpot gets to 176 million or more, is it still a suckers bet?

well yes. typically, the jackpots are paid in an annuity so you are risking a dollars today to win money 19 yrs from now.

And the tax consequence. The dollars you are risking are after tax dollars while the dollars you win are taxable (at least in the US).

9

Yes, I would call it that.

10

Let’s say, a guy were to buy a $300 airplane or bus ticket to California in the hopes of meeting Paris Hilton and asking her to marry him. Is that a sucker’s bet? By your definition, you say “no” because the chance she might say yes is non-zero.

11

It is, although you can reframe it in other terms, such as “renting a dream”. I’ve only bought lottery tickets maybe three or four times in my life, but when I did I made sure to buy it with the maximum number of days between the purchasing of the ticket and the drawing of the numbers, then I kept the ticket in my back pocket everywhere I went. I think it heightened my mood somewhat. So I suppose you could put a value on that.

12

Agreed. I do think the lottery is a sucker’s bet given the low chance of payout (and the high chance that if you do have a payout, your life will be pretty fucked-up afterward)… but I view the occasional lotto ticket as entertainment money, not as a real gamble.

Of course, I did get a winning Mega Millions ticket the other day.

I won two bucks!

13

I would actually use a stronger word than “sucker”.

But that’s only if you think of it as a bet. If you get significant entertainment out of it, then it’s cheaper than many other forms of entertainment. I don’t understand it though - I’d get more enjoyment spending the $1 on a 20oz pop.

14

Really? I suspect that someone with more time and more training in statistics would find that these two situations can be reasonably solved, and you’ll find that investing a dollar a week in the stock market actually does have a greater rate of return* than buying lottery tickets.

Let’s assume that your lottery ticket, purchased for $1, has a 1-in-10-million chance to win that 10 million jackpot. Let’s further assume that Uncle Sam doesn’t take a cut, and that the store that sells you the ticket does so out of the goodness of their hearts and takes no cut from your purchase price. This is strictly a bet between you and the State Lottery folks, OK? So what happens if you buy 10 million of these tickets for 10 million dollars? It doesn’t matter if you do this all at once, or over a hundred years- the odds remain the same.

One of these tickets wins, in all likelihood, and the other 9,999,999 were wasted You spent $10,000,000 to win $10,000,000, and you and the State Lottery folks are both out a whole bunch of time. Clearly, this is a dumb way to run a lottery from the perspective of the people running it. So what they’ll do is make it so that your $1 ticket has a mere one-in-one-billion chance of winning that ten million. That way, for every billion tickets sold (and no lottery in the world sells a billion tickets) they only have to pay out ten million. Every lottery in the world is basically a variant of this.

Any individual player can win, but the public at large is always the loser and the lottery folks always win. The only way to beat the lottery folks is if the dollar value of the jackpot is bigger than the number opposite the “1” in your stated chances**. So if you can find a lottery that pays out $10,000,000 one time in 5,000,000, or $100 one time in 50, or $3 one time in 2, bet the farm. But short of that, you’re going to lose in the long run.
Now, if you invest that $1 a week in the stock market, the odds of it shooting up to ten million is quite slim (maybe as slim as the lottery, I grant you). But it’s also not likely to drop to zero, as your lottery tickets are almost certain to do.

*“Rate of return” is statistics for “If I do this a whole bunch of times, will I have more or less than I started with, and how much?”

**This specific calculation is true for $1 tickets.

15

Here

16

Interesting. 100% of the respondents to this thread thought that the lottery was a sucker bet. I would wager a lot of money that no one who responded has ever won a big jackpot. They may play the lottery once in a while for fun, and win a few dollars here or there, but has anyone won at least $10M? I doubt it. Because if you asked someone who purchased a $1 lottery ticket and **had **won $10M, $20M or $50M they would certainly disagree with you.

While I grant you there aren’t very many ‘grand jackpot’ winners around, if any one of them had felt it was a sucker’s bet and not bought a ticket they wouldn’t have won **their **big jackpot. So I would argue that playing the lottery is for fools ***until ***you win a big jackpot, and then it becomes the best dollar you ever spent (yes I realize that you don’t usually get all of your money in one lump sum and that sudden unexpected wealth can cause you lots of problems, but I’m willing to accept that possibility).

So every week you decide it’s foolish to buy a lottery ticket and don’t buy one you have a 0% chance of winning a lot of money, while risking very little… and every week I play the lottery I risk a whole $1 at a real chance to win a fortune. Sure, I could spend that $52 a year on more beer, but personally I would rather have the chance to win a big jackpot than have zero chance and have a little more beer in my life… but that’s just me. Clearly I am in the minority on this topic.

17

Imagine you have some willing to make this wager with you dolphinboy:

He gives you $1 and a set of numbers. He doesn’t buy any lotto ticket. You don’t buy any lotto ticket. You keep the the $1. Now, if his numbers happens to match the winning lotto numbers, you must empty out your bank account to “pay” him.

Would you do it? Would you see $1 as free money? How many times would you be willing to play that game to keep getting $1? If you participated in that wager, who’s the sucker? Him or you?

18

It’s even worse than that. As the value gets better, the number of people buying lottery tickets will increase. So your odds of being the sole winner will drop, meaning that the (say) $5 million prize is now a $2.5 million prize each for two people. Even if the expected value of a $5 million prize made the purchase statistically worth it, that is likely not true for a $2.5 million prize.

The simple fact is that anyone who plays the lottery for financial reasons is making a very poor choice.

19

The problem with this is mentioned in the link provided by astro:

I recall a story from a good while back about a state (could have been MA) lottery prize that “rolled over” enough to get big (say, 70M) - a record at the time. When the prize was finally won, the press was on hand as a guy with a winning ticket showed up: “How does it feel to have won the biggest jackpot in state history?”

But the number that won was a popular one, so the prize was split something like 60 ways. And the guy with the ticket was one of a syndicate with (IIRC) around 120 member who had pooled their funds to buy a bunch of tickets. So the question should have been “How does it feel to have won 1/7200 of the biggest jackpot in state history?”

20

I think of it as making a small donation to the State, but with the added of fun of having a small chance of winning something. I’m only a sucker if I think I’m making an investment.