A rogue Romanian economist legally gamed the lottery
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Re: A rogue Romanian economist legally gamed the lottery
#2AFAICT, many jackpot style lotteries get an expected value (EV) above 1 when the jackpots get big. They're set up so their average EV is 0.4 - 0.5, but when a jackpot isn't won, the payout is under 0.1. String a bunch of those together in a row, and the EV creeps above 1.0.
The calculations are easy to do. You do need to estimate the number of people who buy the tickets so you can calculate the odds of sharing the jackpot. The real number isn't publicly available, but newspapers often have numbers for similar jackpots in the past.
As the article mentions, lotteries protect themselves by making it logistically impossible for anybody to buy every ticket.
Here's the calculation for Canada's Lotto 6/49 in 2007: https://docs.google.com/spreadsheets/d/1vHOOdmobb3729ezH1BnO...
Re: A rogue Romanian economist legally gamed the lottery
#3Seems kind of silly that they hyped it up as some kind of mathematical savant genius story, when it seems like they just took a simple lottery system (x numbers give y combinations, which sell for $1 per combination, for a total payout of >$3y) where the logistics operation was the more impressive aspect.
Re: A rogue Romanian economist legally gamed the lottery
#4It's interesting that Jefferson had thoughts about the original intention of the lottery system. The logistics of buying each ticket seems nightmarish. I wonder if this same gaming can be applied to other things
Re: A rogue Romanian economist legally gamed the lottery
#5When I was in my final year of high school, Coca-cola was giving away an iPod Nano to lucky winners who entered codes from plastic bottle caps or glass bottle labels.
An iPod was given away once per day, except Monday, when they were given out once per hour. I was competing against the rest of Switzerland. Each code had to be entered on a website, earning 0, 5, 10, 20 or 50 points. You could then choose how many points to gamble during the day/hour, and would hear at the end of the day/hour whether you won.
The school had a bottle-cap recycling bin. Every day, I dug through that looking for Coke caps. I volunteered for GAOS (a theatre group) and served drinks outside their show, collecting many paper wrappers from glass bottles.
After collecting 1500 points, at 2 am on a Monday night, I struck with half my points. And I failed! Shocked, I tried again at 3 am, risking all the remaining points I'd saved up. And I won! I was the "lucky" recipient of a 2GB iPod Nano.
Was it worth it? Yes, because I was under the employment age. I couldn't have earned money legally, so my opportunity cost of time was low.
Earlier, in primary school, the classes bought Pizza Hut once a week. During a promotion, their pizza boxes were printed with stars, which could be saved up and exchanged for free pizza. So I went around and asked all the teachers for their old boxes, cut out the stars, and got a second pizza every week!
If only it were that easy for me to find a job nowadays, despite a first-class MEng in Electronic Systems Engineering and 4 years continuous relevant work experience. Even trying to follow the rules and get all the qualifications doesn't seem to work.
Re: A rogue Romanian economist legally gamed the lottery
#6Seems kind of silly that they hyped it up as some kind of mathematical savant genius story, when it seems like they just took a simple lottery system (x numbers give y combinations, which sell for $1 per combination, for a total payout of >$3y) where the logistics operation was the more impressive aspect.
From the linked article [1](Romanian language) it sounds like he had claimed to have a special mathematical method to convince his early investors in Romania but it was entirely made up. He was basically scamming them and had no idea if they would actually win.
[1] http://www.bursa.ro/industria-de-gambling-iulie-1994-primul-...
Re: A rogue Romanian economist legally gamed the lottery
#7AFAICT, many jackpot style lotteries get an expected value (EV) above 1 when the jackpots get big. They're set up so their average EV is 0.4 - 0.5, but when a jackpot isn't won, the payout is under 0.1. String a bunch of those together in a row, and the EV creeps above 1.0. The calculations are easy to do. You do need to estimate the number of people who buy the tickets so you can calculate the odds of sharing the ja…
While true, expected value isn't necessarily a useful metric at that point.
If I have a one in a googol chance of winning a googolplex dollars, it doesn't really matter that the expected value is going to be huge, I still won't win anything because I'll be insolvent before the requisite number of tries to have a reasonable chance of winning.
Re: A rogue Romanian economist legally gamed the lottery
#8When I was in my final year of high school, Coca-cola was giving away an iPod Nano to lucky winners who entered codes from plastic bottle caps or glass bottle labels. An iPod was given away once per day, except Monday, when they were given out once per hour. I was competing against the rest of Switzerland. Each code had to be entered on a website, earning 0, 5, 10, 20 or 50 points. You could then choose how many poin…
> despite a first-class MEng in Electronic Systems Engineering and 4 years continuous relevant work experience.
Really? I'm kind of surprised that someone with this kind of background has difficulties finding a job in Switzerland. Normally people like you need to write 3 applications and at least two of the companies want to hire you.
Re: A rogue Romanian economist legally gamed the lottery
#9AFAICT, many jackpot style lotteries get an expected value (EV) above 1 when the jackpots get big. They're set up so their average EV is 0.4 - 0.5, but when a jackpot isn't won, the payout is under 0.1. String a bunch of those together in a row, and the EV creeps above 1.0. The calculations are easy to do. You do need to estimate the number of people who buy the tickets so you can calculate the odds of sharing the ja…
Your EV numbers are high.
If the EV was really significantly above 1.0 (say 1.5) then everyone would buy a lot of lotto tickets. It would be simple arbitrage. In reality all of those people buying extra tickets (because of the high perceived EV) would mean a higher chance of splitting the pot. Splitting the pot would reduce the real return by 1/2 for every person that purchased a ticket.
Re: A rogue Romanian economist legally gamed the lottery
#10AFAICT, many jackpot style lotteries get an expected value (EV) above 1 when the jackpots get big. They're set up so their average EV is 0.4 - 0.5, but when a jackpot isn't won, the payout is under 0.1. String a bunch of those together in a row, and the EV creeps above 1.0. The calculations are easy to do. You do need to estimate the number of people who buy the tickets so you can calculate the odds of sharing the ja…
Your EV numbers are high. If the EV was really significantly above 1.0 (say 1.5) then everyone would buy a lot of lotto tickets. It would be simple arbitrage. In reality all of those people buying extra tickets (because of the high perceived EV) would mean a higher chance of splitting the pot. Splitting the pot would reduce the real return by 1/2 for every person that purchased a ticket.
Sometimes the EV goes above 1.0 and there are several groups of people who closely monitor lotteries all over the US to spot this event. When it does happen, which is very rare, they do calculations on the expected impact, viability and if their conclusions are good, swoop in and buy hundreds of thousands of tickets.
They have people printing tickets for an entire day. They pay stores to stay open late. It's a tactical operation.
Sometimes the jackpot is so anomalously big that the general public can't buy enough tickets to bring it back down below 1.0.