Matched 5/7 on the Lottery today... :D

[DotKritic]

Originally Posted by GuidoHunter

I usually drop about $25 on scratchoffs at Christmas with my cousins and maybe $2 during the year if there's an especially high powerball or something.

I set aside $20 per paycheck that I use on lottery - whether it be scratch offs, lotto, or both.

My minimums on when to play the lotto:
Texas Two Step: $500,000 (play starts at $250,000)
Lotto Texas: $10 mil (play starts at $5 mil)
Mega Millions: $100 mil (play starts at $12 mil)
Powerball: $100 mil (play starts at $40 mil)

I started doing that so I would spend game after game.

[PaperclipGames]

Logically speaking it is unwise to put money into a lottery because the expected outcome is strictly less than the money you put into it.

Basically, you have huge odds of losing a fair amount of money, and an incredibly small chance of winning a really high amount of money. In almost all of the cases, you lose.

In the 24 ball thing where if you pick all 12 or none of the 12, and you gain $250k if you get it right, but lose $2 if you get it wrong, I calculated that the expectation value of one lottery draw is about -$1.82 (in other words, the expectation value of the draw itself is a measly $0.18). You are predicted to win less than a tenth of your input.

There are certainly lotteries with a much better ratio. Then again, I assume that in this 24 ball game there are also other prizes that you can win with other combinations.

[dAnceguy117]

people who think buying lottery tickets is a great investment definitely do not understand how things work.

but what about buying them for entertainment? if that's not worth spending on, then the only worthy expenditures are food and shelter.

that said, I've never bought a lottery ticket haha. casinos are my jam.

[DotKritic]

Originally Posted by PaperclipGames

There are certainly lotteries with a much better ratio. Then again, I assume that in this 24 ball game there are also other prizes that you can win with other combinations.

0 or 12/12: $250,000
1 or 11/12: $500
2 or 10/12: $50
3 or 9/12: $10
4 or 8/12: $2

[ilikexd]

Originally Posted by DotKritic

I set aside $20 per paycheck that I use on lottery - whether it be scratch offs, lotto, or both.

My minimums on when to play the lotto:
Texas Two Step: $500,000 (play starts at $250,000)
Lotto Texas: $10 mil (play starts at $5 mil)
Mega Millions: $100 mil (play starts at $12 mil)
Powerball: $100 mil (play starts at $40 mil)

I started doing that so I would spend game after game.

why do you do that?

[DotKritic]

Originally Posted by ilikexd

why do you do that?

Why do I wait?

[ilikexd]

Originally Posted by DotKritic

Why do I wait?

well either that, or why do you reduce every paycheck you make by around $20

[SK8R43]

Originally Posted by dAnceguy117

people who think buying lottery tickets is a great investment definitely do not understand how things work.

but what about buying them for entertainment? if that's not worth spending on, then the only worthy expenditures are food and shelter.

that said, I've never bought a lottery ticket haha. casinos are my jam.

Scratch offs are great and definitely worth buying AT LEAST ONCE to see what your luck is. If its good then keep buying, if not then stop if you please. Just saying this because buying scratch offs CAN BE a good investment.
I personally usually win more than i pay, hell ive even won $30 on a 2 dollar ticket.

[ilikexd]

Originally Posted by SK8R43

Scratch offs are great and definitely worth buying AT LEAST ONCE to see what your luck is.

how is it worth buying at least one if every one has a negative expected value?

Originally Posted by SK8R43

If its good then keep buying, if not then stop if you please.

each lottery ticket has an independent outcome so that's not a valid strategy

Originally Posted by SK8R43

Just saying this because buying scratch offs CAN BE a good investment.

can you give conditions where it CAN BE a good investment? besides the obvious where your chance of winning * how much you win > cost of the ticket

[PaperclipGames]

To me, gambling in this way is like, throwing away money. There is some chance you'll turn out making profit, but those chances are too low to consider.

If you want to gamble, do it in some game that involves any sort of strategy. Go to the casino and play poker or blackjack.

[EzExZeRo7497]

Originally Posted by PaperclipGames

If you want to gamble, do it in some game that involves any sort of strategy. Go to the casino and play poker or blackjack.

ty

[dAnceguy117]

Originally Posted by PaperclipGames

To me, gambling in this way is like, throwing away money. There is some chance you'll turn out making profit, but those chances are too low to consider.

If you want to gamble, do it in some game that involves any sort of strategy. Go to the casino and play poker or blackjack.

whether we're talking about lottery tickets or poker cash games, I think you should go in with the assumption that you will lose money. you shouldn't spend what you can't afford, as with any other form of entertainment.

side note: you can use optimal strategies in blackjack to give yourself the best odds of winning, but beyond that, it's entirely luck-based. poker is different in that regard.

[devonin]

A friend of mine from University argued that in order to claim lottery winnings, you should be required to submit an explanation in writing showing that you understand that even having won, it was still a bad idea to play.

Also, I recall a study done a year or two ago that found that something like 30% of Americans consider "Playing the Lottery" to be a legitimate part of their life financial strategy.

The irony of funding education (or claiming to fund education) on the back of a system that preys on ignorance of how math works has always fascinated me.

[Wayward Vagabond]

winning the lottery is my financial plan. so far ive spent 24k over the course of 5 years and when i win it will be a small price to pay considering the money that i will be winning

[devonin]

If you spend 20 dollars per check, assuming you're paid every two weeks, so 25 paychecks a year, that's 500/year which is, in a 40 year career 20,000 dollars. Statistically, your odds of winning even 40,000 dollars on Powerball (a 100% return on your lifelong investment) are 1 in 648,945

With 2 draws per week, and you playing in every draw (which you don't), it would take you over 6000 years to get that 40k payout, which would have come from an investment of a little over 3 million dollars.

[devonin]

And buying a lottery ticket is like, the least exciting way to gamble from an experiential standpoint. I would much rather spend that 40 bucks once a month at a casino at some cheap poker or blackjack table, or even slot machines.

My entire experience with lottery tickets is "I pick some arbitrary numbers, wait a week, and then spend 15 seconds looking in the newspaper to see that I didn't win anything. Sounds fun!

[Reincarnate]

Originally Posted by devonin

Also, I recall a study done a year or two ago that found that something like 30% of Americans consider "Playing the Lottery" to be a legitimate part of their life financial strategy.

I remember seeing something like how many poor families tend to spend like over $600/year (or something like 10% of their net income) on lottery tickets -- a ridiculous waste of money that could be better spent getting *out* of poverty, but unfortunately it's hard to become sufficiently versed in things like math/probability/personal finance when you're poor and uneducated.

The irony of it all? Many winners find themselves right back in poverty within a couple years. They mismanage their money and blow through it all. They become targets for criminals. Social relationships turn to shit, and families are torn apart. Some people commit suicide or get murdered. It's really depressing stuff.

[Reincarnate]

IMO expected value/utility is a super interesting concept.

SCENARIO 1

You have $1000. What do you choose:

Option A: 50% chance of earning another $1000, 50% chance of earning $0
Option B: 100% chance of earning another $500


SCENARIO 2

You have $2000 this time. What do you choose:

Option A: 50% chance of losing $1000, 50% chance of losing $0.
Option B: 100% chance of losing $500


Choose what "feels right" to you, then crunch the math and wonder wtf is wrong with your brain

[igotrhythm]

Originally Posted by Reincarnate

IMO expected value/utility is a super interesting concept.

SCENARIO 1

You have $1000. What do you choose:

Option A: 50% chance of earning another $1000, 50% chance of earning $0
Option B: 100% chance of earning another $500


SCENARIO 2

You have $2000 this time. What do you choose:

Option A: 50% chance of losing $1000, 50% chance of losing $0.
Option B: 100% chance of losing $500


Choose what "feels right" to you, then crunch the math and wonder wtf is wrong with your brain

I've seen this one before. Judgment under Uncertainty by Tversky and Kahneman. Fun stuff.

[Reincarnate]

Originally Posted by igotrhythm

I've seen this one before. Judgment under Uncertainty by Tversky and Kahneman. Fun stuff.

Yeah, the expected value in all four outcomes here is $1500, which means they're all "equivalent" on average if you were to play this game over and over and over again.

To those that aren't convinced, I just wrote a quick Monte Carlo simulator:

from random import random

trials=1000000
scenario1A=0
scenario1B=0
scenario2A=0
scenario2B=0

for t in range(trials):
    dice = random()
    if dice <= .5: scenario1A += 1000 + 1000
    else: scenario1A += 1000
    scenario1B += 1000 + 500

    dice = random()
    if dice <= .5: scenario2A += 2000 - 1000
    else: scenario2A += 2000
    scenario2B += 2000 - 500
    
print scenario1A/float(trials)
print scenario1B/float(trials)
print scenario2A/float(trials)
print scenario2B/float(trials)

1500.418
1500.0
1499.092
1500.0

#all four options ultimately converge on 1500, and are exactly 1500 at trials=infinity

In Scenario 1, people usually won't mind going for Option A. There's a chance of earning a lot of money and a chance of being no worse off, so hey, why not take the risk?

But Scenario 2? The idea of possibly losing $1000 scares people shitless, and so many will go for Option B even though they may not lose anything at all if they had chosen A.