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

In My Humble Opinion
41

It’s a bet that has a very, very, very small likelihood of paying off; that’s not really in dispute.
But I’m not sure we’ve agreed on the definition of “sucker bet” here.

My wife and I often purchase small amounts of lottery tickets when the jackpot gets really big. We don’t actually think we’re going to win. But in the meantime we have some fun conversations about what we’re going to do “when” we win. Then we lose, become mock-outraged at our bad fortune and get on with our lives. It’s all in good fun; someone upthread called it “renting a dream.” I like that description and I think it’s well worth a couple bucks now and then.

Sure, one can fantasize about being filthy rich for free, too, but there’s something more concrete and immediate about the fantasy when you’re holding a real (albiet miniscule) possibilty that it’ll come true. When we don’t win, I don’t feel like a sucker at all.

42

I think Wheelz captures the essence of why I was suggesting it wasn’t necessarily a sucker’s bet, at least in my way of thinking. Fortunately, I can afford to ‘throw away’ $1 a week on something that is frivolous and unlikely to pay off for me in the long run. BTW, going to Las Vegas and placing my $1 bet on a roulette table would cost me a lot more than $1 since I can’t get there for free. Can you?

The fact that you have an incredibly small chance of winning is apparently what makes most people believe it’s a sucker’s bet.

I guess I have a problem with most people thinking that people who play the lottery are stupid, or foolish, since the odds are so long. Some people think they are lucky enough to win, and of course a few people actually do win.

As long as state lotteries are run legitimately, and I haven’t seen any evidence that they aren’t, I still think the risk is worth the reward, regardless of how unlikely I am to win. As the saying goes, somebody has to win, and I have just as good chance as anyone else.

43

No, having an incredibly small chance of winning is pretty much the definition of a sucker bet. It’s based on the estimate winnings. It’s just math.

44

But see then you aren’t “betting.” You are playing your own game, in which the Lotto is a peripheral element. And good on you for that. I myself waste at least $1 a week on various things, so I’m not making any judgments here. But that doesn’t change the basic fact that the Lotto itself is still a sucker’s bet.

But it is only by adding an extra element, that you can even start to claim that it is not a sucker’s bet. I can go down to a subway station and play a game of Three Card Monty and concoct elaborate scenarios about that in my mind too, but it doesn’t make the basic game any less of a sucker’s bet.

45

<pulls hair out>** unsubscribe**

46

It happened in Pennsylvania, too, but that was different because it was fixed.

47

It is a sucker’s bet.

I still play whenever the amount on the state lotto (odds of jackpot 1/6M) gets to a level that would allow me to quit my job.

I have a Ph.D. in engineering and I definitely understand the odds. But I also can afford the money, and I also get a little lift from the chance, no matter how small it is.

48

:confused::smack:

I’m at a loss to understand why people here feel compelled to redefine the term “sucker bet” to suit their own whim. it’s already well-defined; this shouldn’t be in IMHO, it should be in GQ, as there is a factual yes-or-no answer to the OP’s question.

49

I believe dolphinboy’s problem is that he wants to eliminate the negative connotation of “sucker” even though he (somewhat) acknowledges the prevailing mathematical definition of “sucker’s bet.”

I think the idea is similar to this:

“Yes, I know the definition of ‘ignorant’ is to not know or be aware of a specific piece of information. If someone doesn’t know the state capitol of California, he is ‘ignorant’ of that particular fact. However, it’s not fair to call him ‘ignorant’ because it has a negative connotation of low Intelligence Quotient.”

50

I suspect that people don’t view this in terms of the actual values and probabilities. I think that they usually just see this as wagering an amount that doesn’t change their standard of living for a very slight chance of greatly improving their standard of living.

I know several states have tried to stop the practice but I think that they should allow someone to walk into the lottery office with $195 million dollars (or whatever the local amount would be) and purchase one of each combination. That person would get all of the smaller prizes for matching 3, 4 or 5 numbers and a share of the jackpot. However, they wouldn’t be guaranteed to be the only winner so they could still lose money.

51

Scratch-off games? Pay off 50 cents on the dollar. Sucker bet.

Even on the rare occasions where a rolling payout big lottery has an ‘expected payout’ higher than the cost of the ticket, it doesn’t take the exorbitant taxes into account, nor the penalty for actually wanting the money you won today.

So, for instance, if a $1 ticket has a 1 in 8 million chance of winning, and the ‘expected payout’ is $10 million, one might say the expected payoff of a $1 bet is $1.25, but that’s not true. The $10 million will be taxed by the feds, bringing the payout to about $7 million.

Then - oh, did you think you were getting 7 million? You’re getting $7million/50 for the next 50 years. The present value of $140,000 a year for the next 50 years is significantly less than $7,000,000. Or, you can take the payout today, but they knock you off (don’t know how much) for it.

So: sucker bet.

52

You’re absolutely right. I was oversimplifying by assuming that there would be only one winner. In some games, there is only one winner; I think that many scratch-offs have only one winning ticket in each batch printed, for which my math isn’t wrong, but you’re right in saying that if you fill in your own numbers, you run the risk of splitting the proceeds.

53

Could someone simply replace the financial function with a utility function so everyone can go home happy now?

This is how the lotto was explained to me in some class many years ago:

Mathematically, the lotto doesn’t make sense because the expected value (financial) is so much below 1 that the math says playing the lottery is “irrational.” But people still play the lottery… why?

Because it isn’t simply a numbers game. Its MONEY!
The Utility of money doesn’t follow a straight line. Give 1000 dollars to a millionaire and he doesn’t really care. Give 1000 dollars to someone broke, and it really means something.

Anyway for those playing the lottery U(1) < 0.00000000000000000001*U(1000000000000) {Or whatever, I made those number up to make the point}

In other words the utility of one dollar is less than a teeny tiny fraction of the utility of a million dollars for some people.
Still a sucker bet though.

54

Is the lottery a sucker’s bet? Probably
Is it -EV? 99.999% of the time, absolutely.

-EV, for those that don’t know, is a gambling term that means negative expected value. One calculates this by determining the amount possible to win and dividing by the probability of winning it.

For instance, if I were to offer to bet you $2 to your $1 on a flip of a fair coin, you’d take that offer because it has a +EV of $1 per flip, when stretched out to infinity. Would you bet me $500 on the chance of winning $499? Probably not because, even though you stand to win a lot, is a lot it’s -EV to take that bet.

So if a lottery has a 1/140,000,000 chance of winning with the purchase of a ticket then to determine its EV you have to figure 1) the total jackpot, 2) the taxes or other fees that will be taken out when you win and 3) the liklihood of you split the jackpot with another winner or winners.

Most of the time you’re going to come up with a -ev situation. Almost every single time, I’d say.

BUT…and here’s the big thing. Lotteries are funny with how EV works. It’s true that, stretched out to infinity, you’ll never ever earn the money back you place into the lottery when done so in a -EV situation. BUT…human lives aren’t infinite. IF you win, you’re going to win more than you could have possibly put into the system trying. Heck say you put in an insane amount. $1,000 a week, every week, for 70 years. That’s still only $3.6 million and you’ll easily make that back winning just the bare minimum of a $15 million jackpot.

What I’m saying is this. People that choose not to play the lottery at all are not wrong. And people who use money they can’t afford to spend on lotteries as a means to gamble up a better life for themselves are clearly wrong. But there’s a shade of gray in between.

As for me, when the lottery gets above $100 million, I’ll throw in a buck or two and take my chances. I’m fully aware that it’s -EV and I’m fully aware of how unlikely it is that I’ll win. Nevertheless, I can afford to do so and I don’t believe I’m wrong in taking my chances.

55

This is true, but the diminishing marginal utility of money actually makes lotteries a worse bet than the math indicates.

56

Furthermore, many people (as stated upthread) get utility out of the playing itself - the excitement, talking with their spouse about what they’ll do with their winnings, etc.

57

Nah, not the same thing at all. Fixing the game so that there are only 8 likely winning combinations, and buying tix for all 8, is not the same thing as trying to buy tickets for every one of several million combinations, when the prize is bigger than the number of possible combinations.

58

This.

I know the odds. I understand that I’m basically just paying taxes. But I have a hell of a lot more fun paying these taxes than the ones that come out of my pay check or added to my receipt at purchase. Those fun fantasies I have when walking out of the 7-11 or laying in bed at night about the ticket in my wallet are worth the $1 to me, and so long as I’m suitably convinced that my losing goes to some greater good the positives far outweigh the negatives.

Not a sucker’s bet at all in my opinion, but my issue is less with using the term “sucker’s” than it is with the term “bet”.

59

I’d be happy to buy lottery tickets as an alternative to paying income or sales tax. But the government is only offering them as an additional tax.

60

I suppose you could choose to see it as such, but if no one played the lottery those taxes would just be moved somewhere else in the form of extra sales taxes or property taxes. They aren’t “additional” any more than sales taxes or property taxes are.

I have issue with the way lottery taxes are distributed, but if they mean that useful services that would otherwise be cut survive it’s fine with me. I know have far more issue with how my income taxes are allocated than with how may lottery taxes are.