Everybody knows that the lottery is a bad investment. But do you know why? How do you know? For most lotteries, the obvious answer is obviously correct: lottery operators are running a business, and we can assume they have set up the game so that they make money. If they make money, they must be paying out less than they are taking in; so on average, the ticket buyer loses money. This reasoning applies, for example, to the policy games formerly run by organized crime described in [15] and [18], and to the (essentially identical) Cash 3 and Cash 4 games currently offered in the state of Georgia, where the authors reside. This reasoning also applies to Las Vegas—style gambling. (How do you think the Luxor can afford to keep its spotlight lit?)
展开▼
