Can the Lottery Be Gamed?
I bought $150 of tickets to find out
I bought $150 of tickets to find out
Disclaimer: Lottery draws in each country are considered gambling. Please abide by your local laws and understand that all gambling needs to be conducted responsibly. If you feel you may have a problem with gambling, seek advice here.
You’re 219 times more likely to die in an aeroplane crash than you are to win the UK Lotto jackpot. Yet 32 million people in the UK play the lottery on a regular basis.
So is there a way of playing the lottery that maximises your chances? Can it be ‘gamed’?
Even if you’re not in the UK, the lessons and breakdowns here can still be applied to your own country’s equivalent draws.
The inspiration for this post
Each night I walk the dog with my girlfriend and around the same spot, at least once per week, we start talking about dream houses, cars, vacations and saving all of the dogs with our own sanctuary — all funded by a lottery win.
We all dream of winning the jackpot on the lottery, but the bigger the prize, the more unlikely the odds. “Thank you Captain Obvious” I hear you cry.
It’s not that people don’t win, they do. It’s just the odds are so unlikely it makes winning the jackpot unreachable for tens of millions of players.
So I decided to review the odds of all of the UK National Lottery games to see which games had the best chance of actually winning. Then, I put that to the test with my own money.
Here’s how it went and exactly what I won…
Which games have the best odds?
Based on the Lottery’s own site, these are the odds for each official game:
Lotto jackpot — 1 in 45,057,474
EuroMillions jackpot — 1 in 139,838,160
Set For Life top prize — 1 in 15,339,390
Thunderball top prize — 1 in 8,060,598
Hot Picks top prize — 1 in 834,398
With the lowest odds, Hot Picks gives you the best opportunity of winning.
In fact, adjusting for the difference in ticket price, you’re almost 27 times more likely to win the Hot Picks jackpot than the standard Lotto jackpot.
With 27 times greater odds, you’d expect the prize to be 27 times greater (at £9,450,000/$12.3million USD). However, the average Lotto jackpot from the 10 most recent games was £5,230,686.60 — or about $6.8million US dollars. Around half of what it should be.
That means that it’s mathematically inferior to play the Lotto over Hot Picks.
The Euromillions game is worse, becoming 67 times harder to win the jackpot compared to Hot Picks when adjusting for difference in ticket price.
So A Big VC Fund Is Investing In Your Startup? 4 Practical Considerations | Data Driven Investor
First of all - congratulations. Getting a round together always takes work and a big VC fund is certainly a big…www.datadriveninvestor.com
We’ve got the game, what next?
Knowing that the Hot Picks has the best odds in the game, it’s clear to see that it’s the only one worth focussing on.
First, I put the 1 in 10 odds to the test by buying 10 entries into the draw on Wednesday 26th of August 2020.
I picked 10 numbers at random. Expecting, based on the odds, to win £6.
My actual winnings = £12 (that’s a profit of £2 from a little bit of luck and better odds. The proof is below…
Gambling won’t ever make commercial sense
Now it’s time for me to burst your bubble. Gambling won’t ever make commercial sense. These people aren’t stupid. The house always wins. So they rely on most people losing their money in order to generate a profit.
The biggest takeaway is to play the odds. If you do gamble, ensure it’s with favourable odds. This could mean the potential of a much smaller prize, should you win, but anything above your stake is profit.
It may not be as glamorous, but my £2 profit is about $3-$4 more than I had before I clicked the button. Quite honestly, it beat the return I’d get in a standard savings account.
Upping the stakes
I wanted to test a larger amount. Obviously, I can’t stress enough that you should only gamble what you’re comfortable losing, so I was happy to risk $150, or £116 in my local currency.
The limit for this game was actually £120, so I couldn’t have spent more than that, even if I wanted to.
$150 would buy me 116 tickets for the highest odds choice, within the lowest odds game, that being 5 Hot Picks numbers. The chances of winning were 1 in 834,398.
To statistically guarantee a win, I’d need to play this way another 7,192 times.
Of course, the result was a loss
1 in 10 odds was far more favourable and gained me two wins at once.
However, upping the odds by over 83,000 times, it was almost certain that my money would be gone.
Not surprisingly then, the fun of gambling for a life-changing sum is almost always followed by a crushing loss.
What is a better use of your money?
Playing the single number game with 1 in 10 odds, you’d expect two games per week to net you £62.40 winnings in an entire year. A net loss of 40%.
However, by investing the money instead of gambling it, you may have better odds. The average annualized return for the S&P 500 is 9.8%.
That same money, spend in the S&P 500 would likely grow from £104 to £114.20 — a £10.20 net gain. That’s about $13.
The same can be said for real estate. I just sold my house for a £43,000 ($55,000) profit, just 2 years since first purchasing it. A 21.8% gain in investment. Beating both the gambling and index fund investing strategies.
What’s the lesson here?
If you’re going to gamble, ensure you’re balancing your stake against a risk that has more favourable odds, even if the resulting prize is less attractive.
You’re much more likely to win a 1 in 10 lottery game, or correctly choose a 1 in 8 outcome of a horse race. Over time the cumulative winnings will massively outweigh the losses of playing higher stakes games.
However, by choosing not to gamble and investing instead, you’ll be less likely to encounter statistical losses or can diversify against them.
The lottery is fantastic fun, but mathematically, it can’t be beaten. You can always get lucky, or you can be 1 of the other 45,057,473 people that don’t win each week.
By investing in a diversified portfolio of assets, you’ll be able to offset the short-term losses of gambling with far likelier long-term gains.