As previously mentioned, Texas is scheduled to join one of the big multi-state lotteries, in hopes of luring more Texans into plonking down cash for that worst of all longshot bets, lottery tickets.
There's an awesome quote from Weston Ware (referring to multi-state lotteries vs. slot machines, etc.):
"Compared to what was being talked about, Powerball or Mega Millions is more like the flu than it is like pneumonia," said Ware, legislative consultant for Texans Against Gambling. "But I think the people are finally waking up to the fact that the lottery is a bad bet. That's why you're seeing these ticket sales keep going down."
How bad a bet is the lottery? It's not always clear. Here are some basic facts on your odds of winning the jackpot (all balls) in each of these games:
Texas Lotto: 1 in 48 million (used to be 1 in 25 million) Powerball: 1 in 120 million Mega Millions: 1 in 135 million
As to the actual Expected Value of a lottery ticket in these games, it tends to fluctuate based on jackpot amounts, but generally, lottery E.V. is somewhere around $0.40-$0.70 per dollar spent.
Although I strongly recommend against buying lottery tickets because of the terrible E.V., a lot of people do it because the marginal utility of one dollar is arguably small, especially compared to the marginal utility of winning retirement cash. The problem is that most lotto players don't just play one dollar, once; everyone knows people who may have started buying one or two tickets every now and then, who now buy their weekly ticket - or tickets - religiously. It starts to add up, which when dealing with such negative E.V. bets is something you really should avoid :)
I've heard of some state lotteries approaching positive (pre-tax) E.V. when their jackpots get very high, but never a situation where a lottery has positive E.V. There is a pretty good discussion of lottery E.V. in this paper by a Princeton professor.
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