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AltInvestments: $100 Invested in 100 $1 Lottery Tickets

$100 Invested in 100 $1 Lottery Tickets

Tuesday August 7, 2012

$100 in lotto tickets
($100 of $1 lottery tickets)

Investment Idea: $100 invested in 100 $1 lottery tickets.

Total Investment: $100

Total Time Cost: 00:30:00

Extra Costs: None

Total Time Spent on Investment: 10 minutes spent online finding lottery ticket with the best odds. 5 minutes spent buying lottery tickets. 15 minutes spent scratching off all the tickets.

Research and Preparation: Gambling and the lottery have always held an enticing allure for a lot of people: the idea that you could spend just $1 and be rewarded in prizes that are worth exponentially more, and all it would take is a little bit of luck and all your problems would be over. I knew I wanted to try my luck on $1 lottery tickets because I thought it would be cool to buy 100 of them. I also knew that I could find the odds of winning online at http://nylottery.ny.gov/.

After comparing all of the odds for the $1 scratch off tickets I came to a couple of conclusions:

- There are twelve different $1 scratch off tickets available in New York

- The odds of winning ranges from a best of 1:4.64 (Instant Take 5)

- To a worst ratio of 1:5.09 (Happy Birthday Cupcakes)

Happy Birthday Cupcakes Scratch off Ticket
(Never buy birthday themed tickets)

- The average odds of winning on a $1 scratch off ticket was 1:4.88

- The NY lottery website never refers to odds of winning, but instead calls it “Chances of Winning”

- The $1 scratch off ticket with the worst odds is the “Happy Birthday Cupcakes” ticket (1:5.09), ticket (1:5.09). Also, the other birthday themed ticket “Happy Birthday Presents”, with odds of 1:4.99, has the third worst odds of the batch. If you value your friends and give them lottery tickets for their birthdays please don’t buy them birthday themed tickets to help them increase their odds.

Happy Birthday Presents Scratch off Ticket
(Don’t buy these tickets either)

- The $1 scratch off ticket with the second worst odds is the Gold Rush, 1:5.02. I assume it has such bad odds since the allure of gold suckers people in.

How I chose which lottery ticket to buy?
After seeing the spread of the odds and the possible prizes I decided to choose the $500 A Week For Life ticket. It’s overall odds of 1:4.84 wasn’t the best, but it put it in the better half. Also, its namesake price of $500 a week for life was the best possible grand prize out of all the $1 scratch off tickets. Winning $500 a week for life would have provided the greatest possible return for my $100 I can think of. Of course the odds of winning 1:7,938,000 but, “hey you never know.”

Some of the other odds for the $500 A Week For Life ticket:
PrizeOdds of WinningExpected Winning TicketsTotal Winning Amount
$11 in: 10.0010$10
$21 in: 15.156$12
$41 in: 62.501$6
$51 in: 125.000$0
$101 in: 100.001$10
Total1 in: 4.8418$38

To make the above table I took the total number of tickets (100) and divided by the odds. This left me with “Expected Winning Tickets”. If this number had a remainder, I rounded down since you can’t buy or win a partial ticket. Also, everyone loses when they gamble, so I wasn’t going to give myself the benefit of the doubt.

So it looks like I should have anywhere from 18 to 21 winning tickets, and win a prize amount of about $38 to $40, for a return of at least -60%.

With my ticket chosen and my research done I headed to my local bodega and asked if they had 100 of the $500 a Week For Life lottery tickets, just to check before I bought some. They did.

Counting 100 Lottery Tickets
(Counting 100 lottery tickets)

Counting 100 Lottery Tickets
(Checking all of the tickets)

As soon as I had paid for the tickets with my five twenty dollar bills I couldn’t wait to get home. (Side note: something annoying about lottery ticket buying is it is cash only, so no credit card rewards points here.)

Stack of Lotto Tickets
(Stack of lotto tickets)

All of the tickets were stacked and ready to scratch! Was I about to be the proud recipient of $500 a week for the rest of my life? Or had I just thrown $100 down the drain?

Piles of lotto tickets
(Guess which pile is filled with winning tickets?)

If you said the one on the right then you are correct. After fifteen minutes of furious scratching I came away with twenty two winning tickets and a total prize amount of $41. I had lost $59 on this investment in a matter of twenty minutes, and I had actually slightly beaten the odds that I had found and reproduced above.

Reason for Investment:

Everyday, millions of people in America play the lottery and hope for the best, but more often then not it is just them throwing their money away. But wouldn’t it be great if you could just on a whim plop down $1 and buy a ticket that changed your life? I decided it was worth it to try it a hundred times over and invest $100 in $1 lottery tickets.

Returns: $41. I actually came out ahead of what I had expected on this investment, but even that meant a massive loss of $59.


My Total Winnings Table:

Prize Amount |Number of Winning Tickets | Total Winnings
$1
13
$13
$2
7
$14
$4
1
$4
$10
1
$10
Total
22
$41

As you can see the predictions from my research were almost spot on.

Big ticket winner
(The big ticket winner was just $10)

The thrill and rush of possibly winning started to wear off after about the twentieth losing ticket. Each card had a couple of “Life” symbols on them, and every time you got a second you just dreamed of seeing the third one under the remaining graphite. However it never appeared and never will and it just kind of turned depressing. How could people put themselves through this humiliation and teasing every day of their lives? This is definitely an investment that is not rigged in your favor and can never really bring you positive returns.

Brett

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Comment

  1. Would it make sense to spend your $41 in winnings on another 41 tickets? It would be sort of like compound interest.

    na · Aug 10, 12:47 PM · #

  2. Haha, with an expected return of 38%, compounding should yield about $41 * 38% = $15.58 :)

    Sean Palmer · Aug 17, 04:05 PM · #

  3. Generally I think compound interest is not desirable when the rate is -59% interest.

    Evan · Aug 17, 04:09 PM · #

  4. Seems to me that the odds have improved and you definitely should buy 41 more tickets. At least, if you can buy them in the same batch of tickets.

    You started with 1:7,938,000 odds of winning the $500/week. Since you got 100 losing tickets, there remains 7,937,900 tickets around with a chance of winning the $500/week. At least if nobody else has already won it in that batch, and much less if people have already bought losing tickets from that batch.

    With 41 more tickets you should be left with $16, so buy 16 more tickets, then 6, then 2, for a total of 165 chances for $100.

    The problem is knowing when and where batches are diffused, and at what rate they’re bought, and whether the $500/week for that batch has been found already.

    If you knew those data, you could increase your odds, by choosing the right time to buy your tickets. You’d want to buy them when enough losing tickets have been already sold, but not too late.

    If the batches are bought entirely, and at a constant rate, then at half the period, half the losing tickets are sold, and if nobody won, you have now 1:3,969,000 odds of winning the $300/week.

    If you’re not in a hurry, and can know when the winning ticket is bought, you could wait for the last day of each period and buy your tickets only if the winning one hasn’t been sold. Of the period of the batch is weekly, then you’d have odds in 1:1,134,000 and if you buy 165 tickets with your $100, you’d have close to 1:6,872 to win it.

    informatimago · Aug 17, 08:07 PM · #

 
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