($100 of $1 lottery tickets)

**Investment Idea:** $100 invested in 100 $1 lottery tickets.

**Total Investment:** $100

**Total Time Cost:** 00:30:00

**Extra Costs****: ** None

**Total Time Spent on Investment:** 10 minutes spent online finding lottery ticket with the best odds. 5 minutes spent buying lottery tickets. 15 minutes spent scratching off all the tickets.

**Research and Preparation:** Gambling and the lottery have always held an enticing allure for a lot of people: the idea that you could spend just $1 and be rewarded in prizes that are worth exponentially more, and all it would take is a little bit of luck and all your problems would be over. I knew I wanted to try my luck on $1 lottery tickets because I thought it would be cool to buy 100 of them. I also knew that I could find the odds of winning online at http://nylottery.ny.gov/.

After comparing all of the odds for the $1 scratch off tickets I came to a couple of conclusions:

– There are twelve different $1 scratch off tickets available in New York

– The odds of winning ranges from a best of 1:4.64 (Instant Take 5)

– To a worst ratio of 1:5.09 (Happy Birthday Cupcakes)

(Never buy birthday themed tickets)

– The NY lottery website never refers to odds of winning, but instead calls it “Chances of Winning”

– The $1 scratch off ticket with the worst odds is the “Happy Birthday Cupcakes” ticket (1:5.09), ticket (1:5.09). Also, the other birthday themed ticket “Happy Birthday Presents”, with odds of 1:4.99, has the third worst odds of the batch. If you value your friends and give them lottery tickets for their birthdays please don’t buy them birthday themed tickets to help them increase their odds.

(Don’t buy these tickets either)

How I chose which lottery ticket to buy?

After seeing the spread of the odds and the possible prizes I decided to choose the **$500 A Week For Life** ticket. It’s overall odds of 1:4.84 wasn’t the best, but it put it in the better half. Also, its namesake price of $500 a week for life was the best possible grand prize out of all the $1 scratch off tickets. Winning $500 a week for life would have provided the greatest possible return for my $100 I can think of. Of course the odds of winning 1:7,938,000 but, “hey you never know.”

Some of the other odds for the $500 A Week For Life ticket:

Prize |
Odds of Winning |
Expected Winning Tickets |
Total Winning Amount |
---|---|---|---|

$1 | 1 in: 10.00 | 10 | $10 |

$2 | 1 in: 15.15 | 6 | $12 |

$4 | 1 in: 62.50 | 1 | $6 |

$5 | 1 in: 125.00 | 0 | $0 |

$10 | 1 in: 100.00 | 1 | $10 |

Total |
1 in: 4.84 |
18 |
$38 |

To make the above table I took the total number of tickets (100) and divided by the odds. This left me with “Expected Winning Tickets”. If this number had a remainder, I rounded down since you can’t buy or win a partial ticket. Also, everyone loses when they gamble, so I wasn’t going to give myself the benefit of the doubt.

So it looks like I should have anywhere from 18 to 21 winning tickets, and win a prize amount of about $38 to $40, for a return of at least -60%.

With my ticket chosen and my research done I headed to my local bodega and asked if they had 100 of the $500 a Week For Life lottery tickets, just to check before I bought some. They did.

(Counting 100 lottery tickets)

(Checking all of the tickets)

(Stack of lotto tickets)

(Guess which pile is filled with winning tickets?)

**Reason for Investment****: **

Everyday, millions of people in America play the lottery and hope for the best, but more often then not it is just them throwing their money away. But wouldn’t it be great if you could just on a whim plop down $1 and buy a ticket that changed your life? I decided it was worth it to try it a hundred times over and invest $100 in $1 lottery tickets.

**Returns:** $41. I actually came out ahead of what I had expected on this investment, but even that meant a massive loss of $59.

My Total Winnings Table:

Prize Amount |
Number of Winning Tickets |
Total Winnings |
---|---|---|

Total |
22 |
$41 |

As you can see the predictions from my research were almost spot on.

(The big ticket winner was just $10)

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Minor correction – your expectations should have been $36, because winning 1 ticket worth $4 will not grant you $6 in profit

I think it’s almost “suspicious” that you got more $1 and $2 winners than expected 😉 But really just within the margin of… odds!

It seems strange that the odds of winning $5 are worse than the odds of winning $10. Is that a misprint?

This would be an good opportunity to run some machine learning techniques on the data of the tickets

Been there, done that.

Doesn’t help a lot.

You may find some weird patterns (at least in my dataset).

And that info might improve your odds about 0.001% but that’s about it.

The higher the ticket prices the better the odds in my state. I wonder how that would change your experiment. Would you be better off buying five $20 tickets at 1:3.15?

I wonder if the return would vary at a if you purchased say, 20 tickets from 5 different stores.

The comments above mine are really weird. They’re like, spam that is trying to help you write a better blog by giving you bad advice. I have never seen this before.

What about tax? I believe you owe some tax on the $41 ‘investment’ so you’re ‘winnings’ are really only about $30.

You can count loses against winnings so no tax would be due.

You can count losses against winnings so no tax would be due.

He lost $59 on the investment so it would gain a tax loss carryforward.

I believe you only pay taxes on net winnings. Winnings minus purchase prices. In this case your net winningswould be -$49 and you would not owe taxes.

Well of course you came out behind. You scratched them all. If you are buying in bulk, you get to exploit the weakness uncovered by Eli Rosenberg, as reported in Wired magazine. Essentially, he found a statistically significant (3/5) portion of lotto scratchers have raised inks over the winning spaces. Then, you return the unscratched cards, claiming they were for a charity and weren’t bought. Rosenberg suspected it was a laundering scheme.

I knew someone that worked at a gas station and they found a pattern in the winning lotto tickets. They would guess at which tickets would be the winning ones. I think they were right 75% of the time. It was also against store policy them to buy lotto tickets from the same store. So, if you found the pattern with the id number at the bottom you could potentially beat the system.

I love this. I’ve always wondered what would happen with something like this and it was nice to live vicariously through your story.

It also reminded me of the WIRED article about the guy who figured out how to pick winning lottery numbers based on the serial numbers, but he was so smart it wasn’t worth his time.

@anil, there’s no tax because of the $100 cost. He would only pay tax on profit.

So to break even, you need to live

1$-38$/100=0.62$

0.62*7938000/500/52 = 190 years…

In Belgium there’s a lottery where you break even after 70 or 80 years. Meaning if you’re SURE that you will live to be 100 years, it’s a business opportinity 😉 (If you’re not sure you’ll need to look up the mortality distribution…)