"Anti-lottery" contests: bad idea?

[Boojatta]

For example, a ticket costs $200. The odds are good that you will win $10 and also get back your original $200. However, there's a chance that you will not win $10 and will not get back your original $200.

Of course, it wouldn't be practical to try to sell tickets that cost a million dollars each. Nor would it be practical to try to collect money from the losers if the cost of losing is a million dollars. So the ratio is not as extreme as in a regular lottery. The odds of losing in an anti-lottery would be much higher than the odds of winning in a traditional lottery.

If there's a gap of a week or two between buying a ticket and the draw, then the interest on the money could help finance some of the administrative costs of the anti-lottery.

[LeftyFingerPop]

1. If you thought this up...

I salute you.

I have to think about this...but I love this kind of creative thinking.

[jmowreader]

2. I don't get it. I'm sorry.

Look at the Powerball lottery. It costs a dollar to play, and the payout is never less than $15 million. And sometimes it's in the hundreds of millions. Okay, the odds of hitting all six numbers are infinitesimally small, but if you do you've got enough money to make a substantial change in your life for less than the price of a soft drink. And if you lose? Well...you drank one less Coke.

Your antilottery costs $200 to play and offers a payout of $210. I'll throw some numbers in here:

The essential breakeven point, discounting administrative charges, is one loser out of every twenty players. You use the twentieth guy's ante to pay off the other nineteen, and keep the other five for yourself.

If you want to be a little more real, assume you can run this thing on 25 percent of the take. You need $150 to pay off the 15 people who won, pay office expenses, advertising, printing tickets, paying vendors, giving money to education like every lottery claims to do...yeah, $850 would take care of all that.

From the side of the antilottery commissioner, that all sounds real nice. But from the side of the player, it doesn't look so hot. If I win, I get enough back after paying for my ticket to buy three gallons of gas and a can of cola. But if I lose...$200 will feed my cats for five months. Even if there's only a one-in-twenty chance I'd lose (which makes it totally unprofitable for the antilottery commission), the reward doesn't justify the risk.

[Boojatta]

3. Maybe it would be educational.

When people cut corners in various ways, they justify their decisions on the grounds that the odds of a problem are low. How low is low and what are the consequences if they are wrong? An important point is that many people cut corners not just once in a lifetime. They cut corners many times.

Do people have a good intuition when it comes to determining whether or not various events are independent of each other?

Are they good at estimating the probability of an event that is defined in terms of a large number of other events?

Do the vast majority of people pay attention to the difference between various probabilities that are close to zero or does at least a small but significant fraction of the population classify a variety of quite different probabilities close to zero in a single category of events of "negligible" probability?

[alphafemale]

4. But the sad thing about the Lottery...especially Powerball

Is that the people who really can't afford it, don't buy just ONE ticket.

They buy 20-50 dollars, or more, worth of tickets when that really does nothing to increase their odds of winning, given the miniscule odds in the first place.

And that 20-50 dollars does make a difference in a budget that's already tight to begin with.

I'm not at all proposing that the Lottery be banned, but it is sad how people are hooked into the fantasy of "PowerBall."

[LeftyFingerPop]

5. Depending on the odds...

I might even play something like this. Makes more sense to me to take a chance at recouping your original wager plus a little more, rather than pissing away a buck for something that you are never going to win.

That being said however, just as the odds are ridiculously bad that you will ever win on a regular lottery, the odds here would have to be ridiculously good that I would win a recoup as well as $10 on a $200 bet in order for me to play.

EDIT: meant to type $200 bet, not $2.

[jmowreader]

6. I thought about this...

I came up with a plan that would work, both in the amount of revenue generated and in the probability that anyone would actually play.

Let's throw out two numbers: a ticket costs a thousand dollars, and the odds of winning a prize are one in two. We've already decided that anyone who wins a prize gets his original wager back, in addition to any prize money won. Further, there are only ten tickets available in each "class."

After we sell out the class, we wait a week and then draw five of the tickets.

The five we didn't draw lose their initial wager.
The first ticket receives $100, plus the initial wager.
The second and third tickets drawn receive $200. The fourth $500, and the last receives $1000.

We deal with the fact that tickets cost $1000 by selling "fractional tickets." You can buy a half-ticket for $501, a quarter-ticket for $251, all the way down to a hundredth-ticket for $11. The extra dollar is a handling charge, of course.

So far, for each class we take in $10,000 and pay out $7000.

Now at this point we have people walking around with a lot of money in their pockets. We then introduce the next class, where the price of tickets doubles as do the prizes. We would encourage people to gamble in the next class using money they won in their first class.

If you ran "first class" draws every week, "second class" every month and so on, eventually you've got a pissload of money sitting there. Assume you could build excitement through 21 draws. The person who won the twenty-first draw would go home with a billion dollars. (A 100th share is $10 million.)

Would you wager $11 knowing that you might possibly go home with $100 million? Yes.

Would you wager $200 knowing you could only ever hope to win $10? Probably not.