My co worker just came by to do the rounds for the Mega Millions Lottery. Any time the jackpot goes over $100 million, we each put in $5 into the pool. I take a copy of all our tickets and watch the drawing at 11pm on Tuesdays and Fridays, since all my co workers are fast asleep by then. Then I count how much we’ve ‘won’ and post it up in the office the next workday. We won $4 last time. Yeah, baby!
This reminded me of a conversation I had once with BGWNC about the lottery. He strongly believed that the lottery is basically a tax on the lower and middle class. Think about it. The motto for the New York lottery is ‘All you need is a dollar and a dream.’ And how many times have you seen little news stories about how people flock to the local corner deli to buy hundreds of lottery tickets when the Power Ball jackpot jumps to a quarter billion?
With me and my co workers, we’ve each thrown in $15 so far to the government. (If you want to get a bit technical, the place where you buy the ticket gets 5%) And we usually do the lottery pool a couple times a year. Let’s say that comes up to $50 a person. How much do you actually win back? My company has never gotten more than 20% back, but we keep buying them tickets. Why? Because we foolishly believe in hope. And the government is smart enough to prey upon on hope, completely banking on our stupidity.
I’ll give you a simple example. One of my co workers routinely buys tickets for the Pick 4. He has a boat and its number is 4902. So every week, he buys 10 tickets at a dollar a piece. There are two ways you can win. The first is if you get the number right on the money; that’s called a straight pick. The other is if you get all four numbers correctly, but not in the right order. That’s called a box pick.
Time for some math.
For the pick 4, there are 10,000 possibilities: 0000-9999. (Don’t count them out. Just add 1 to each number and you’ll get 1-10,000) So you have a 1 in 10,000 chance of winning the straight pick. That’s a ratio of 10,000:1
With the box pick, you have a little better chance. Since the order of the numbers doesn’t matter, let’s start with getting one of your numbers right first. We’ll use my co worker’s boat number as an example. His numbers are 4-9-02. That’s 4 numbers. The possibilities for the first number are 0-9, ten numbers.
So for #1, you have 4 in 10 chance. Let’s say the first number is 0.
Now for #2, you need to get either the 2, 4, or 9. That’s a 3 in 10 chance. Let’s say the second number is 2.
For #3, you need to get the 4 or 9. That’s 2 in 10 chance. Let’s say the third number is 4.
For #4, you need to get that 9. That’s a 1 in 10 chance.
Now that we have all the probabilities, we multiply them together.
0.4 x 0.3 x 0.2 x 0.1 = 0.0024. This translates into you having 24 chances out of 10,000 of hitting the box pick. That’s a ratio of about 416:1
So you put your chances of winning the straight and box picks together, and you have a 25 in 10,000 chance of winning on any given drawing. That comes out to .25% chance or one quarter of one percent.
You can find online a list of recent drawings along with the payouts for the straight and box picks.
I averaged out the last 40 payouts for each.
Box came out to be $209.25 with a high of $583.50
Straight came out to be $2813.95 with a high of $3899.50
Compare those to the ratios from before.
Box ratio is 416:1. Payout roughly averages $209 for every ticket you buy.
Straight ratio is 10,000:1. Payout roughly averages $2814 for every ticket you buy.
The government has a massive edge on you every time you buy a ticket. Casinos call this the house edge. I’ll take roulette as another example, because everybody likes that wheel. If you walk by and drop some money down on say number 19 and you hit, the payout is 35 to 1. So if you throw down $10, you get $350. Do you know how many numbers are on the roulette wheel? 38. (1-36 and 0 and 00.) So the odds of the marble landing on 19 are 38 to 1.
Your winning ratio is 38:1. Payout is $35 for every dollar you put in.
That’s how the casinos make money. They have that slight edge in math. Sure, you’ll hear stories from your drunken friend of how they walked by, threw down $100 on their lucky number and it hit, but that’s just one story from one table in a casino filled with about fifty tables with a dozen people at each table.
The government makes so much money off the lottery. My friend was right. It is a hidden tax on the people. But we keep hoping. When my co worker came around asking for my $5, I gladly pulled out my wallet and forked over the money. Why? Because I’m an idiot, but that $5 allows me to dream until the drawing tomorrow night at 11pm. Then my dream comes crashing down. But at least Liz Cho is on immediately afterwards.
