Cracking the lottery

[unixronin]

Via Bruce Schneier:  Scratch-game lottery tickets are vulnerable to analysis that can give up to a 90% success rate in selecting winning tickets.  The average payout on a lottery ticket is 53 cents on the dollar, but there's strong circumstantial evidence that organized crime groups have figured out how to game the games effectively enough to use them for money laundering.

While approximately half of Americans buy at least one lottery ticket at some point, the vast majority of tickets are purchased by about 20 percent of the population.  These high-frequency players tend to be poor and uneducated, which is why critics refer to lotteries as a regressive tax.  (In a 2006 survey, 30 percent of people without a high school degree said that playing the lottery was a wealth-building strategy.)  On average, households that make less than $12,400 a year spend 5 percent of their income on lotteries — a source of hope for just a few bucks a throw.

[...]

[T]here’s a disturbing body of anecdotal evidence (in addition to those anomalous statistics) that suggests that the games aren’t perfect.  Consider a series of reports by the Massachusetts state auditor.  The reports describe a long list of troubling findings, such as the fact that one person cashed in 1,588 winning tickets between 2002 and 2004 for a grand total of $2.84 million.  (The report does not provide the name of the lucky winner.)  A 1999 audit found that another person cashed in 149 tickets worth $237,000, while the top 10 multiple-prize winners had won 842 times for a total of $1.8 million.  Since only six out of every 100,000 tickets yield a prize between $1,000 and $5,000, the auditor dryly observed that these “fortunate” players would have needed to buy “hundreds of thousands to millions of tickets.”

And if the average payout is 53 cents on the dollar, but some ticket buyers who have cracked the game are redeeming possibly hundreds to thousands of times their statistically expected "share" of winning tickets ...

Well.  You do the math on what that would do to the average payout for ticket buyers who haven't cracked the games.

Comments

[ithildae]

I remember on night with a bunch of knuckleheads that we decided to buy a book of tickets each. We spent the night cracking wise and scratching tickets. I made about $400 that night. The only time I have ever bought a ticket. I doubt I would do it again.