When Are State Lotteries a Good Bet (Revisited)?

Victor Matheson

Eastern Economic Journal, 2001, vol. 27, issue 1, 55-70

Abstract: Because the jackpots in lotto games are potentially unlimited, it has been speculated that these lotteries may have a positive expected return for high jackpots. While most previous work has concluded that the lotto rarely presents a player with a positive expected return, this paper modifies previous payoff models and finds several cases where a positive expected return has existed. Furthermore, contrary to the existing literature, purchasing every possible number combination for a particular lottery drawing increases the expected return to the purchaser and leads to further instances where state lotteries provide a fair bet.

Keywords: Lotteries; lottery; lotto (search for similar items in EconPapers)
JEL-codes: D81 H27 L83 (search for similar items in EconPapers)
Date: 2001
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Citations: View citations in EconPapers (15)

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