2005-04-28
Lottery vs. Vegas Death Match
This is a long entry, but one I have been thinking about writing for a while. If you have been reading my diary, you all know that I love to go to Vegas. I like the excitement and I love to people watch. I will play some video poker and my table game of choice is Craps, but all in all, I hate to lose money and never start to play with the expectation of winning. I just consider losing money in a casino as the cost of the entertainment. But to be fair, I know lots of people who say that they would never go to Vegas to lose money in a casino, but who play the lottery every week. At least I get the benefits of free drinks, interesting people watching, and the delicious visual and auditory sensations that go along with being on a casino floor. If you are interested read the article from Motley Fool that I have below, then I will talk some more about the economics of casinos and the odds of winning on a slot or at a table.
Win More in the Lottery!
Friday April 22, 9:11 am ET
By Selena Maranjian
• Finally -- some terrific news has come out of the world of lotteries. For too long, the news has mostly been bad.
The good news is that Powerball payouts are increasing. The jackpot currently begins at $10 million, but by the end of the summer, it will rise to $15 million, with each subsequent drawing hiking the jackpot by at least $5 million. The second prize is being doubled, from $100,000 to $200,000. Powerball is a multi-state affair, with some 29 states participating and offering residents the chance to play twice a week.
Not only are the payouts increasing, but so are the number of little white balls. That's right -- there will soon be 55 of them instead of 53. Wait a second, though... more balls means more numbers to choose from, which means the odds of winning are growing more remote. Your likelihood of winning the jackpot is going from 1 in 120.5 million to 1 in 146.1 million. Hmm...
Think about it like this:
• Imagine that you're in a room with 120 million people. That's more than the populations of South Africa, Italy, Cambodia, and Armenia combined. (It will have to be a big room.) To imagine the odds of your Powerball ticket winning the jackpot, imagine being randomly chosen out of all those people. Now, imagine that the entire population of Malaysia enters the room. You've got close to 146 million people in this room now (and it's getting a little warm). Imagine being the one person randomly selected out of all of them.
• Another way to think about it is that 146 million is very close to the entire population of Russia. Imagine picking one name out of all of Russia's phone books.
• 146 million is also close to half of the population of the United States. The odds of winning the Powerball jackpot are like picking two people randomly out of all of America, all 50 states. If you think you have a good chance of being one of those two people, then go buy a lottery ticket.
• 146 million years ago was roughly the Jurassic period, when dinosaurs roamed the earth. Mars is roughly 140 million miles from Earth. A typical number of hairs on a human head is about 130,000 -- so to get to 146 million, imagine 1,123 people and then imagine choosing one hair on one of their heads.
• FedEx (NYSE: FDX - News) delivers more than 6 million shipments for express, ground, freight, and expedited delivery services each day. 146 million represents some 24 days' worth. Imagine all the packages that FedEx delivers in 24 days, and then imagine the odds of your picking the one package among them that has a jackpot in it.
• I've read that you're more likely to die in a car crash on your way to buy lottery tickets than you are to win a Powerball jackpot.
So why are these lottery changes being made? Well, bigger jackpots tend to draw more players. And more players means more money in the system. Remember, lotteries don't exist to reward gamblers, they exist to raise revenues. From gamblers.
End of Article
***Since the article above mentioned FedEx, did you know that in the early 1970’s when FedEx was just getting going that it faced a huge cash crunch and it was saved by Fred Smith the Founder and still CEO jumping on an airplane, flying to Vegas and winning nearly $30,000 at the blackjack tables. He wired the money back and FedEx was able to keep on flying. If his luck had been different, there might not be a FedEx today.
Also, did you realize that the Keno games played in casinos today (basically just a form of lottery for those of you not familiar with the game) was invented by the Chinese to pay for the Great Wall of China?!
While the total amount you could win is much larger in a Lottery, your odds of actually winning the big prize is virtually nothing. Most people who do win, just win a dollar or three and usually use it to buy more lottery tickets. The lottery is basically a tax on people who are not good at math.
The Casino business is a simple statistical business, in many ways very, very similar to the insurance industry. Casinos cover literally trillions of bets on random events (dice rolls, card flips, wheel spins, or slot pulls) each day, with the odds on every bet slightly favoring the house. With an established statistical advantage, operating profitability is then determined by the number of decisions or completed betting events per unit of time. For a player with limited capital, i.e. you and me, the expected outcome is total loss. The average player has the highest probability of winning if just one large bet is placed (if you have to try to double your money, bet your whole stake on black for a single spin of the wheel. Statistically, you would have a nearly 50/50 shot at doubling your money on that one spin. If you win, don’t get greedy, just stop playing.). The greater number of bets made, the higher the probability of losing because the house’s edge enables it to grind down the player’s capital.
I am actually starting to run out of steam on this entry, so I will quickly end this thing. The moral of this story, from my prospective is, if you are going to play the lottery (and the average lotto player spends over $1,000 a year on the lottery) I am just saying to save your money for the year. Fly out to Vegas, have a good time, people watch, etc. They take what you have left, put it on one spin of the wheel and you might even end up better off than you would have been if you had played the lotto all year long. You might still not have any of the cash, but you have almost a 50% chance of doubling whatever you bet and you would have a good vacation out of it!
-- rockabillie at 4:10 p.m.