[oryctolagi]

Vampyr, on 2016-February-17, 09:17, said:

I usually buy a lottery ticket when there is a positive expectancy. So, not often!

Interesting. I wonder what amounts to a 'positive expectancy' in your view. To me, the expectancy - the expected return - on a £1 lottery ticket - is always less than £1. Otherwise the 'good causes' wouldn't be able to benefit, nor would the operators be able to make a profit. It's the same with bookmakers and casinos. They're run as a business, not for your financial benefit!

wank, on 2016-February-17, 10:58, said:

no the machines oryc was referring to are not like fruit machines/US slot machines.

Clearly I got it wrong! I thought that these were like what in the UK we do call fruit machine, that means the sort with (usually three) rotors carrying pictures of fruit and other symbols, the object is to line up three identical symbols or certain combinations. Presumably that's one form of what's called 'slot machine' in the USA. But I've just googled a bit (betting shops being off my regular beat! ) and it seems the fixed-odds machines offer different games like roulette. I didn't know that.

Anyway, the point is, a minority of vulnerable people (I'm not speaking of multitudes of course) do get horribly addicted to these things, push all their cash into them, and end up seriously in debt. And it has erupted as a significant social problem, which is why many people want the things banned.

[wank]

as i do frequent LBOs (betting shops), i've had plenty of opportunity to observe the people playing these machines. interestingly they adopt a very different strategy to casino roulette players. in the shops they almost all cover around 80% of the numbers, albeit to varying degrees, rather than the casino punters who normally restrict themselves to around 15%. i suspect this is to do with the nice graphical representation or where your money's going and the ease of touching the screen to spread it around. anyway, this means they're betting considerably more per spin which is of course fantastic for the shops and bad for the punters' wallets.

[Vampyr]

oryctolagi, on 2016-February-17, 13:30, said:

Interesting. I wonder what amounts to a 'positive expectancy' in your view. To me, the expectancy - the expected return - on a £1 lottery ticket - is always less than £1.

No, that's not true.

[Zelandakh]

oryctolagi, on 2016-February-17, 13:30, said:

Interesting. I wonder what amounts to a 'positive expectancy' in your view. To me, the expectancy - the expected return - on a £1 lottery ticket - is always less than £1.

Then you are not understanding how the lottery pool works. There are many documented cases of people making small fortunes by betting on lotteries with a positive expectation, in some cases with 0% risk. The way it works is that a proportion of each ticket price, in the UK slightly under half, goes into the prize pool. of that prize pool, some goes into fixed prizes and the rest is put into the jackpot fund. If no one wins this it rolls over, thus increasing the prize fund for the following draw. Depending on the lottery design, enough funds can sometimes roll over to increase the expected return to greater than the ticket cost. The overall amount being paid out remains at the basic percentage, so the "good causes" get their funding, it is just that less is being paid out over a number of weeks and then more in the next.

NB: I have not done the maths on the UK lottery under the current rules so I cannot tell you when this point occurs but perhaps Stefanie has done this already and can provide details.

[wank]

most of the people who hate gambling don't understand what it really is. it's just an exercise in maths and risk-reward, much like investing money (yes even in a pension - you're just delegating the choice of investment to the pension company) or buying insurance.

of course the odds are normally against the customer (as they are when you buy insurance), but as with the lottery rollovers, with a little selectivity one can find opportunities with a positive expectation. those very same betting shops which have FOBTs also often have very generous offers on horse-racing bets as a loss-leader to get people through the doors to play the machines.

[StevenG]

Does the positive expected value have any real meaning? Presumably it still includes winning a jackpot at impossibly small odds. If you recalculate with those odds at 0, rather than 1 in 45 million, I would presume that the expected value goes negative (does it?), or becomes so trivially positive the whole thing is a waste of time.

[helene_t]

wank, on 2016-February-18, 06:47, said:

most of the people who hate gambling don't understand what it really is.

I wonder. I suppose you will find leftwingers who are against it because it makes most people poorer while rewarding the rich owners of the gambling industry plus a few lucky winners. You will find some who are against it because of the destructive impact on the gambling addicts' lives. You will also find some puritans who are against it just because.

It may be true that most people haven't thought about the differences and similarities between gambling, hedge fund investments, pension schemes, life insurance etc in terms of risk profiles and NPV, but even so they may still understand the social implications of gambling regulations:
- Fewer people having their life ruined by gambling addiction
- Gambling moving underground
- Slippery-slope (maybe BBO will become illegal, too?)

[1eyedjack]

helene_t, on 2016-February-18, 07:01, said:

hedge fund investments

Ah, those synthetic CDOs. "Dog ***** wrapped in cat *****". Best line ever in The Big Short.

[Vampyr]

Zelandakh, on 2016-February-17, 16:50, said:

NB: I have not done the maths on the UK lottery under the current rules so I cannot tell you when this point occurs but perhaps Stefanie has done this already and can provide details.

LOL I just guess or believe it when someone tells me.

StevenG, on 2016-February-18, 06:56, said:

Does the positive expected value have any real meaning? Presumably it still includes winning a jackpot at impossibly small odds. If you recalculate with those odds at 0, rather than 1 in 45 million, I would presume that the expected value goes negative (does it?), or becomes so trivially positive the whole thing is a waste of time.

Positive is positive. People who make a living by gambling will exploit situations where they have even a very small advantage. But it all adds up.

Winning the lottery is a one-off, but it seems to me that not buying a ticket when there is a positive expectancy is simply a mistake.

[Zelandakh]

StevenG, on 2016-February-18, 06:56, said:

Does the positive expected value have any real meaning? Presumably it still includes winning a jackpot at impossibly small odds. If you recalculate with those odds at 0, rather than 1 in 45 million, I would presume that the expected value goes negative (does it?), or becomes so trivially positive the whole thing is a waste of time.

Do a google on Masachusetts lottery, perhaps adding "positive expectation" or the like. You will see that this is by no means a waste of time - when the opportunity comes up there is serious cash to be made.

[barmar]

We have video poker in our casinos, maybe there's also video roulette.

And in Vegas, gambling machines are not just in casinos, they're everywhere. Most notably, the waiting areas at the airport. On my first trip to a Vegas NABC, I got to the airport very early for my flight home, and had nothing much to do other than play video poker.

[billw55]

barmar, on 2016-February-18, 09:26, said:

On my first trip to a Vegas NABC, I got to the airport very early for my flight home, and had nothing much to do other than play video poker.

No longer a problem in the smartphone era

[Stephen Tu]

Zelandakh, on 2016-February-18, 08:51, said:

Do a google on Masachusetts lottery, perhaps adding "positive expectation" or the like. You will see that this is by no means a waste of time - when the opportunity comes up there is serious cash to be made.

The Massachusetts situation was a strange isolated case, google "Massachusetts Winfall":
http://www.huffingto..._n_1729416.html
https://slice.mit.ed...ng-the-lottery/

I believe the gist is when the lottery jackpot had reached a sufficient size, a very unusual rules quirk capping payouts and rolling down prizes to tickets matchiing fewer than all six numbers created a situation where syndicates wagering very large sums could be gambling with significant positive expectation, essentially from an overlay on the current lottery drawing granted by the losers of previous lotteries. But this game was shut down.

In most of the other lotteries, such as the multi-state Powerball, while it's theoretically possible to reach positive expectation, it hasn't happened yet and isn't likely to. This is mainly due to: 1. Taxes, and 2. Sharing jackpot with multiple winners when several people select the winning numbers.
So even in the recent "1.5 billion" Powerball, it came nowhere near positive expectation. For one thing the lump sum payout was "only" about 930 million, tax knocks that down by 40-50%. Then with the publicity of the big jackpot, the number of players seriously swell and the probability of multiple winners increases substantially. In practice 3 tickets split the money. So you end up with "only" $187 million as a winner, nowhere close to the $580 something million that the odds need for neutral EV (given that each ticket costs $2 and your odds are something like 290 million - 1 against.)

Actual positive EV situation has occurred in smaller lotteries:
http://www.forbes.co...n/#698637f7145c
But it is quite rare, and to guarantee a win by choosing all possible numbers runs into serious practical logistical concerns of how do you buy so many tickets, ensure non-duplication of numbers, working around state laws barring bulk ticket sales, etc.

So lottery is nearly always, unless you get a strange Massachusetts situation, a seriously lousy way to gamble. I don't agree with your characterization of "many cases of people making small fortunes gambling on lottery with positive EV". Only a few cases. If you want to gamble with positive EV, IMO the only realistic options are becoming very skilled at poker, sports betting, fantasy sports betting, or betting in the financial markets. The common theme among these is that you are mostly betting against other people (preferably mostly stupid people), with the house only taking a cut of the action, rather than you betting directly against the "house" which is always rigged against you. If you can bet better than the other people by a margin enough to overcome the house cut, you can become a professional gambler.

[Stephen Tu]

Vampyr, on 2016-February-18, 08:32, said:

Winning the lottery is a one-off, but it seems to me that not buying a ticket when there is a positive expectancy is simply a mistake.

This isn't true, because of marginal utility value of money and risk of ruin/bankroll considerations. For most people, losing a large sum of money with near certainty hurts them a lot more than they would gain in joy from a remote chance of an inconceivable fortune. Take an example, say you had a sum of $250000 available to wager in Powerball. The jackpot has inexplicably grown to a point where it's +EV, say $700 million even after taxes & splitting it a few ways, so it's being advertised as like the $4 billion lotto. Still, even if you bought quarter million worth in unique lottery tickets, it's still over 99.9% that you won't win! Are you willing to throw away a quarter million 99.9% of the time for a 0.1% chance of winning 700 million just because it's technically +EV? I'm certainly not. Most people should not be taking this wager. If you are rich enough that this wager is reasonable, that quarter million is entertainment money, then you have enough money that it's silly to play the lottery for a small gain when you can just try to invest it wisely with less risk of some freak 6-way jackpot split killing your odds.

Now maybe you can say you should buy just one ticket, but then the magnitude your "mistake" is losing out on an expectancy of like 10 cents.

If you are playing lottery, it should be solely for entertainment value of the fantasy of winning the jackpot. For +EV gambling there are much better avenues to explore, making many bets with positive expectation and grinding out your advantage over time, rather than shooting for the moon.

[wank]

Stephen Tu, on 2016-February-18, 12:55, said:

So lottery is nearly always, unless you get a strange Massachusetts situation, a seriously lousy way to gamble.

there are lots of lotteries out there with different rules. the australian keno lottery is very doable i heard.

[Stephen Tu]

wank, on 2016-February-19, 02:17, said:

there are lots of lotteries out there with different rules. the australian keno lottery is very doable i heard.

Doable regularly on a +EV basis?? I can't possibly believe that.

What's special about Australian Keno? The Keno in casinos in Las Vegas is well established as one of the worst games in the casino. Lotteries in general are designed to be voluntary taxes on the poor and mathematically challenged, they generally pay out only 50-70% of the money wagered in winnings, and are going to be -EV by design. If they weren't -EV the governments and gambling establishments wouldn't offer them! The only time +EV situations really arise are when there is a progressively growing jackpot, that keeps growing if no one hits the winning numbers, and it somehow manages to get large enough. The non-payed out winnings from previous drawings are in effect added to the current drawing and make the current drawing +EV.

And as described before because of taxes & splitting jackpots, this situation exceedingly rarely comes up.

[wank]

well for a start, winnings are not taxed in many jurisdictions. gambling winnings are not taxable in the the UK for example (i don't know about australia, but as in the uk, australians are much more liberal about such matters than the US so i suspect winnings are not taxed there either). of course the government is extracting its cut from the lottery company though so the pot is reduced one way or another, but if it's not coming out of your winnings it's effectively the people who played in previous non-rollover weeks who are paying your tax for you and i expect the cut is much lower than in US anyway.

anyway here is a link to an article about it. it says they won at least 4 jackpots over 2 years. they were collecting the retailer's cut from ticket sales which obviously improves the maths.

http://www.afr.com/b...-20120608-j2lq3

the website is australian financial review. i'm not au fait with australian media, but i suspect its standards of journalism are above the likes of buzzfeed.

[barmar]

wank, on 2016-February-19, 09:33, said:

i'm not au fait with australian media, but i suspect its standards of journalism are above the likes of buzzfeed.

Not sure about that. This line gave me pause: "mathematically, such a run of wins was not just remote but almost improbable." Unless "improbable" has a different connotation in Australia, I think they meant "almost impossible". The next sentence says that the odds are 11 million to 1.

[Stephen Tu]

wank, on 2016-February-19, 09:33, said:

anyway here is a link to an article about it. it says they won at least 4 jackpots over 2 years. they were collecting the retailer's cut from ticket sales which obviously improves the maths.

Hmm, from what I can gather, this guy and his partners waited until the jackpot had grown enough for the game to be only slightly minus EV then swung a deal with the game operator for a massive commission rebate in exchange for the business to get it slightly in the positive? Then it involved gambling well over the jackpot amount (7 something million) to win the jackpot, then I guess eking out some small profit from the smaller prizes and the commission rebate. And it seems he no longer is involved in this, probably having found easier avenues to grind out his +EV (seemingly mostly in horse racing).

It still doesn't seem "doable" for the average person to me, it's a lot easier to win at poker or sports betting than finding these rare lottery situations to exploit, and having the capital to cover all the possibilities. I mean the guy already had well over the lottery jackpot amount, the average person is playing lottery because they *don't* have the jackpot amount.

[Grisescens]

ggwhiz, on 2016-February-08, 12:22, said:

Many moons ago a Toronto club was facing a gaming house charge (there was rubber bridge for reasonable stakes going on) and Eric Murray defended them in court.

He told the judge: Bridge is a game of skill the way I play it but a game of luck the way YOU do. They lost.

Never mind, I figured it out. You can restrict the dealers on the "General" tab.