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Couple wins millions using lottery loophole

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Re: Couple wins millions using lottery loophole

#41

Post by chrismcb »

pliny wrote: post #15
thaumasiotes wrote: post #12

Earlier quoted context omitted.

The state makes money from every ticket purchased. The lottery simply pays out a fixed percentage of ticket revenue. More ticket sales means more money to the state, regardless of whether those tickets, when purchased, had an expected positive or negative return.

If the ticket has an expected positive return for the buyer, then the state must be losing money.

The prize pool losses the money, not the state. This was a mechanism to keep the overall prize pool from getting too large. Of one person won the main prize, then they would get a car majority of the prize pool. Otherwise the prize pool was essentially distribute among all the players. Yes technically if enough people played, they could have spent more than the prize pool, but, if enough people played, then the chance that one person won goes up as well.

Re: Couple wins millions using lottery loophole

#42

Post by kd5bjo »

Slartie wrote: post #25

When I read this kind of stories about US lotteries (and there seem to be several of this kind of stories going around), I always wonder how on earth it is possible for so many cases of failed lottery rule design to exist in the first place, and for those clear failures to persist for so long. Did no one notice that the lottery always lost huge sums of money during the Rolldown draws, while it gained money on normal…

The lottery’s and retailers’ profits are each a fixed amount of the ticket price, and the rest goes into the prize pool. They don’t lose any money unless they commit to paying more prize money than they allocated to the pool. Jackpots are explicitly a (large) fraction of the unallocated award funds and so cannot make the lottery operation insolvent— only an excess of fixed-value awards can do that. In fact, the increased sales on rolldown draws just mean more profit for the operators and reduce their biggest risk, which is something happening to the stored funds used to pay out prizes.

Re: Couple wins millions using lottery loophole

#43

Post by tantalor »

chrismcb wrote: post #38
MeteorMarc wrote: post #18

I just wonder, do you have to think very high about yourself to play such a game and enjoy it? Or very low? I just can not imagine myself feeling good about this. Of course, the feeling dumbs a bit: compare the feelings you had after using your first illegally copied floppy disk or mp3 track and the later ones, but still.

Why would you feel bad? What woukd you have down that was wrong? You aren't taking money from anyone else.

You are taking money from the prize pool, i.e. payouts for future winners.

Re: Couple wins millions using lottery loophole

#44

Post by ocfnash »

A wonderful account of this is given in Ellenberg's "How Not to Be Wrong": https://en.wikipedia.org/wiki/How_Not_to_Be_Wrong

I highly recommend the book; it is a popular mathematics book, written by a real mathematician, discussing some real mathematics, with an engaging style.

Re: Couple wins millions using lottery loophole

#45

Post by chrismcb »

tantalor wrote: post #43
chrismcb wrote: post #38

Earlier quoted context omitted.

Why would you feel bad? What woukd you have down that was wrong? You aren't taking money from anyone else.

You are taking money from the prize pool, i.e. payouts for future winners.

You, and everyone else. That is the rule of the game. You aren't doing anything wrong. By that logic, any money winner is taking payours from future winners.

Re: Couple wins millions using lottery loophole

#46

Post by loblollyboy »

amelius wrote: post #26
Piskvorrr wrote: post #9

Earlier quoted context omitted.

From the article, it seems that it doesn't matter, they're random. (Or were random, apparently it's over now, doesn't matter.) To make up an example: Let's say that betting $1 in some way has a 4% chance of winning, and the payout is 20x bet, so if you win on one ticket, you get $20. So, you buy a lot of tickets (say 1000), and you pay $1000. Most of them don't win anything, but 4% of them win $20; $1000 x 4% x 20 =…

That requires a lot of faith in the fairness of the particular lottery.

A. Any lotto requires faith. B. Selbee didnt put all his money in initially. C. The parent comment is just explaining a concept w a hypothetical example

Re: Couple wins millions using lottery loophole

#47

Post by kd5bjo »

zawerf wrote: post #39
thaumasiotes wrote: post #29

Earlier quoted context omitted.

> mathematically, you must be right. One of the sides must be calculating their expected value wrong. He isn't right. The state doesn't work with expected values in any way. Money comes in via ticket sales, some of it goes into the state budget, the rest goes out as lottery payouts. There is no element of chance in any of that. As you point out here and I point out elsewhere, the expected value of a ticket for the pu…

It's a zero sum game. If one side is positive, the other side must be negative. If jackpot isn't paid out, state gets (ticket_sales), players in total gets (-ticket_sales). If jackpot is paid out, state gets (ticket_sales - jackpot), players gets (jackpot - ticket_sales). The winning players get ((jackpot - winning_ticket_sales) / num_winners) each, the rest gets (losing_ticket_sales). Either way the expected value f…

It’s a zero-sum game, but there are 3 parties: the state general fund, the prize pool, and the players. By regulation, a fixed percentage of each ticket sale goes to the state general fund and the rest goes to the prize pool. Also by regulation, all the money that goes into the prize pool must eventually be paid out to players.

The unpaid prize pool getting too big can cause problems for the operator: there may be accusations by the regulator that it’ll never be paid out, or it could be stolen or mismanaged leaving the operator insolvent because they no longer have the funds they are required to give to players.

A rolldown event is the operator choosing to increase the payout schedule to an expected win for the purpose of reducing their liability of unpaid prizes; tickets having a positive expected value is the entire point.

Re: Couple wins millions using lottery loophole

#48

Post by gauravjain13 »

ocfnash wrote: post #44

A wonderful account of this is given in Ellenberg's "How Not to Be Wrong": https://en.wikipedia.org/wiki/How_Not_to_Be_Wrong I highly recommend the book; it is a popular mathematics book, written by a real mathematician, discussing some real mathematics, with an engaging style.

Video: https://youtu.be/kZTKuMBJP7Y

Re: Couple wins millions using lottery loophole

#50

Post by gniv »

Slartie wrote: post #25

When I read this kind of stories about US lotteries (and there seem to be several of this kind of stories going around), I always wonder how on earth it is possible for so many cases of failed lottery rule design to exist in the first place, and for those clear failures to persist for so long. Did no one notice that the lottery always lost huge sums of money during the Rolldown draws, while it gained money on normal…

I suspect the designers were aware of this shortcoming, but were not concerned. As explained by others in this thread, the state still made money.
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