Exploiting Non-randomness in Scratchoff Lotteries
I think I can convince you that you can win money playing scratchoff lottery tickets. You can't win all the time, but the circumstances under which you can win are fairly common.
I'll highlight two major reasons winning possible.
- Prize distribution is not random.
- The value of future tickets is based on which tickets were previously claimed.
Prize distribution is not random
The goal of the state's lottery is to maximize profit; not minimize exploitability. What if people bought fewer tickets if there were long stretches of consecutive losers in a pack. The state could increase profit by guaranteeing there would be a winner at least every 5 tickets. If guaranteeing no pack contains a long stretch of losers in a row is a feature which makes people play more, then they will introduce that feature.
This is not just hypothetical. This is actually taking place. You can see for yourself by reading the contracts that states make with the lottery ticket printers.
For example, the contract for the Texas scratchoff game Fun 5's requires that no more than 8 losing tickets appear consecutively.
Another common clause is that grand prizes are distributed evenly throughout the game. This is called a "stratified random distribution". If there are 5 grand prizes, then there will be 1 grand prize in every 20% chunk of tickets.
States don't want all of the grand prizes to appear in the first half of a game. If no grand prizes remain in the second half, players will stop playing and the state won't be able to sell enough tickets to make back the money they paid out in the first half of tickets.
The value of future tickets is based on previously claimed tickets
This is similar to Blackjack where the value of a hand is dependent on hands that were previously dealt. This is one part of what makes card counting profitable.
In Blackjack, if the number of remaining face cards and aces is greater than average, then the hand is more valuable. If the number of remaining face cards and aces is fewer than average, the hand is less valuable.
In scratchoff lottery tickets, if the number of remaining grand prizes is greater than average, then the tickets are more valuable. If the number of remaining grand prizes is fewer than average, the tickets are less valuable.
As part of transparency, many states will publish the number of claimed and number of remaining prizes for each scratchoff game.
We can use that data to calculate the value of the remaining prizes and the cost of the remaining tickets. That's all the information we need ot determine how profitable (or costly) a game is.
This website automatically gathers data and calculates the value of each game for several states. Select a state in the dropdown menu at the top of the page and you can see a list of the games ordered by value.
I believe this strategy is what Joan Ginther of Texas used to win three grand prizes totalling $15,000,000 over a 4 year period. I think she waited for there to be an unusually large number of grand prizes remaining and then bought a large number of tickets, virtually guaranteeing she won a grand prize.
Joan Ginther has never revealed her strategy, nor has she given any interviews. But there has been a lot of investigative journalism that supports this being the case.
Of course, there are caveats.
Grand prizes are usually printed as their full annuity value. $5,000,000 over 20 years isn't worth nearly as much as $5,000,000 today. The immediate option is usually about 60% of the annuity; a $5,000,000 annuity has an immediate value of less than $3,000,000. When you're doing the math to see if the remaining prize value is greater than the cost of the remaining tickets, be sure to take that into account.
Also, you'll need to pay taxes on any grand prize. That's going to take of another roughly 30%, bringing the $5,000,000 down to about $2,000,000 after taking the hits for both the immediate payout option and paying taxes.
Nonetheless, if you're going to be playing the lottery, you may as well be playing the games that provide the most value. And perhaps occasionally that will mean the odds are in your favor.