I’m wondering how lottery companies regulate their business. It seems reasonable to assume they know how many winning and losing tickets are out there, and how much profit they will make at the end of the day. But, I bet this is a huge secret. Does anybody have any inside information on how lottery ticket companies function?
They aren’t a “company”. It’s the government.
Which lottery are you asking about? Every time I go to a lottery’s website, all that information is clearly in black and white.
Ok, government.
Any of them. Scratch off tickets to the Power-ball.
For example, http://www.state.nj.us/lottery/where/4-0_where.htm says that NJ Lottery gives out 58.63% of their sales as prizes, 34.43% for Education & Institutions, etc.
Hmm, maybe it’s not such a secret after all. Thanks.
Lottery corporations are run by the state/provincial governments. They must publish how they allocatethe monies.
I’m amazed at the difference between NJ and Ontario Canada.
NJ 58.7% paid in winnings
ON ~33% paid in winnings
In Ontario they even disclose the number of winning scratch tickets remainingin active games (although not how many tickets are outstanding).
Clearly this a liberal conspiracy. We need to organize a blue-ribbon panel to investigate this immediately.
The overall profit by government at all levels is the same, because close to half of those NJ winnings return to the federal government as income tax, while the winnings in ON are tax free.
Private companies such as Scientific Games and GTech are contracted to maintain and secure the network, provide the hardware and tickets, train the POS operators, etc. but the distribution of revenues and prizes are under the government agency’s control, by law. The contract comes under whatever the government sets aside for administration expense.
Lottery drawings like Powerball are a modified parimutuel system, which means that the payout is a fixed percentage of sales.
On scratch-off tickets, it’s the same way. The print X number of tickets knowing that the amount paid out will be a fixed percent of the number sold.
As an aside, the psychology of the scratchoffs is fascinating because they are marketed as games… as if the person who buys the tickets is “playing” or has some sort of interaction. In reality, there would be no practical difference if the printed 90% of the tickets to say “sorry you lose.”
They even know what winning scratch off tickets are still out there:
http://www.ohiolottery.com/Games/InstantGames/Prizes-Remaining.aspx
And if you’re going to be buying scratch-offs, it’s obviously a good idea to check your states’ lottery site before you buy; in most states stores can continue selling the tickets until they run out, even if the top prizes have already been won.