Does It Pay to Buy the Pot in the Canadian 6/49 Lottery? Implications for Lottery Design

27 Pages Posted: 2 Feb 2017 Last revised: 10 May 2018

See all articles by Steven Moffitt

Steven Moffitt

Stuart School of Business, Illinois Institute of Technology

William T. Ziemba

University of British Columbia (UBC) - Sauder School of Business; Systemic Risk Centre - LSE

Date Written: May 5, 2018

Abstract

The Canadian 6/49 Lotto, despite its unusual payout structure, is one of the few government sponsored lotteries that has the potential for a favorable strategy we call "buying the pot." By "buying the pot" we mean that a syndicate buys one of each ticket in the lottery, ensuring that it holds a jackpot winner. We assume that the other bettors independently buy small numbers of tickets. This paper presents (1) a formula for the syndicate's expected return, (2) conditions under which buying the pot produces a significant positive expected return, and (3) the implications of these findings for lottery design.

Keywords: Lottery, Lottery Design, Gambling, Market Efficiency

JEL Classification: G14, D47, G12

Suggested Citation

Moffitt, Steven and Ziemba, William T., Does It Pay to Buy the Pot in the Canadian 6/49 Lottery? Implications for Lottery Design (May 5, 2018). Available at SSRN: https://ssrn.com/abstract=2909324 or http://dx.doi.org/10.2139/ssrn.2909324

Steven Moffitt (Contact Author)

Stuart School of Business, Illinois Institute of Technology ( email )

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Chicago, IL 60616
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William T. Ziemba

University of British Columbia (UBC) - Sauder School of Business ( email )

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Vancouver, BC V6T 1Z2
Canada
604-261-1343 (Phone)
604-263-9572 (Fax)

HOME PAGE: http://williamtziemba.com

Systemic Risk Centre - LSE ( email )

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