from Amazon
Friday, August 05, 2011
Quirks in lotteries
In Canada, and in most lotteries I suspect, when there is no winner for the top prize, all that extra money is rolled over into the next week’s draw all going to the top prize. This is to ensure a guaranteed payout, overall. In Canada, it is (or was anyway when I used to live there), 55% of money is paid out (tax-free!) as winnings.
In Boston, however, they cap the top winnings. Since they also guarantee payouts, the extra money flows down to the lower winners. So, if no one wins the top prize (guess correctly all 6 numbers), then all that extra money that exceeds the cap has to be paid out. And if you have many weeks without a winner, that’s alot of left over money that has to flow down.
But Lu, like the Selbees and a few others, focused on a feature of the game that is extremely rare in the United States, according to gambling authorities contacted by the Globe. The jackpot grows gradually over time from a low of $500,000 to a limit of $2 million to $2.5 million; when the limit is reached and no one claims the big prize, the top prize money is poured into the smaller prizes - or “rolled down’’ - raising the odds of a significant payout.
During normal weeks, picking five out of six numbers correctly will generate a $4,000 prize, but the prize rises to $20,000 to $40,000 during rolldowns, depending on how many winning tickets are cashed. Fewer winning tickets translates to larger payouts: During Cash WinFall’s first year, the prize for picking five numbers correctly once exceeded $100,000.
Likewise, the prize for picking four of six numbers swells from $150 to $800 or even $1,000, while the prize for picking three numbers jumps from $5 to $26 or more.
As a result, sophisticated players do not actually want the jackpot to be paid out - unless it is going to them. The odds of winning the lower prizes are so good, that they can gradually win a fortune just by betting hundreds of thousands of dollars every rolldown week.
"Lottery officials say they have no reason to apologize for Cash WinFall, created under former treasurer Timothy Cahill after a lottery player survey showed people wanted a game that had better odds of winning.”
Got to love people who can’t admit failure. You created a once every three month, near arbitrage situation for smart, rich people in Massachusetts, paying for it with money that should go to the state. Awesome. Our world is so crazy. Timothy Cahill probably loves pitcher win/loss records.