Are Scratch Offs Worth It
Observation: Popularity of scratch-off lottery tickets remains high despite their low odds of winning. The attraction of exponentially increasing an “investment” of $1 with no skill involved draws people to these games.
Hypotheses: If a $1 scratch-off lottery game is played 100 times, the player is likely to lose money in the end. Most people playing the game will eventually lose money, only a few will gain.
Variations: A player can potentially win a large sum of money on the first play with some “luck” on their side.
And yes, I’m aware that had I won the grand prize for $1 scratch-offs (up to $5,000, as far as I saw). Driving them to continue playing in the hopes that it’ll all be worth it eventually. Most of the money taken in by scratch off games is paid back as prizes. The more expensive a scratch off, the higher the “small” prizes tend to be. The higher the odds of winning, the better the prizes tend to be. The lower the odds of winning, the more prizes there tend to be.
Experiment: 100 Texas Lottery scratch-off “Amazing 8’s” games costing $1 each will be purchased. 20 games will be purchased from 5 separate establishments. Amazing 8’s have odds of 1 in 4.65 games at least break even.
———————————————
———————————————
Step 1
I was thinking of buying a roll of scratch-offs, but I wanted to randomize the process, so instead I bought 20 Amazing 8’s from each of these five establishments: Albertson’s, Chevron, Diamond Shamrock and Exxon. I withdrew $100 from an ATM to make all of my purchases, so after tax I spent a flat $100 on scratch offs. The whole process took me an hour as some places I visited did not have Amazing 8’s.
Step 2
Counted and verified that I had exactly 100 Amazing 8’s scratch-off lottery tickets.
Step 3
Got my trusty tools ready: Two quarters. One is an American quarter and the other is a Canadian Quarter. I’ve found that Canadian quarters are much better for scratching mass amounts of lotto tickets!
Step 4
Start scratching! I would scratch and scratch until I found a winner, which would then be placed inside the “Winner$” basket.
Scratching 100 lottery tickets is NOT as exciting as I thought. It felt more like a boring job. Next time I do gambling experiments, I’m goin’ ta Vagas.
Winner$ basket starting to fill up with $1 and $2 wins.
The real gem of the lot was this ticket which won $60! The chances of getting this are 1 in 1,500.
Step 5
Tabulate each amount won.
Losers were placed on the table, and the proud winners were put higher up on the stool (Just for a more dramatic metaphorical effect)
Step 6
Report the totals. I came out ahead with $102! A 2% return.
The proud winners in all their glory, especially our champion: Mr. $60!
After the experiment was completed, I went to the grocery store to cash in my $102. I then proceeded to the Bank of America ATM and deposited the cash directly back into my investment account. So I performed this experiment and MADE $2 and learned a little too!
Step 7
Conclusion. This “investment” of $100 was more of an experiment and should not be used as investment advice. Anyone who invests their money in the lottery for purposes other than mild thrills and entertainment is (according to the odds) just dreaming. The odds prove that if you play long enough, you will lose 75% or more of your money. Of course you can also win a lot of money, but it’s highly doubtful. I just happened to buy the right tickets at the right time for this particular experiment, but if I repeated the experiment again, I would most likely not make a profit or break even.
Hope you enjoyed the experiment, I sure did!
Secrets of State Lottery Scratch-off Contracts
When most people think of advantage gambling, state lottery scratch-offs are the last thing that enters their minds.
Everyone’s heard of counting cards at blackjack. There are even several moviesabout it.
And poker has been shown to be a game of skill; just look at the repeat winners of major tournaments like the World Series of Poker and the World Poker Tour.
But most people still refer to the lottery as an “idiot tax”.
And scratch offs have a notoriously bad expected value (which you can think of as a gambling game’s return on investment).
To give you an example of how bad lottery tickets can be, most $1 scratch offs have an expected value of around 60%, meaning for every $1 you spend, you’re expected to get back just $0.60; a $0.40 loss.
Most penny slots have paybacks that are better than that.
And other gambling games, like blackjack, can approach 99% payback without any card counting at all.
I’m here to shed light on a new way of thinking about scratch-offs and show you how you can improve your odds. It won’t always be profitable.
But under the right circumstances, it can be. If you’re going to play regardless, you might as well maximize your chances of winning.
Here are my insights about how to win at scratch-offs. I’ve gained these insights by reading the contracts and procurement documents that state lottery organizations have with their ticket printers.
Combine these insights with sites that calculate a scratch-off ticket’s odds, and you’ll be playing like a sharp
Where Are Scratch-off Grand Prizes?
Grand prizes are not random.
Is It Worth Playing Scratch Offs
I’m sure all of these insights will come as a surprise.
But this one is probably the biggest.
Surely the state wants to ensure a fair game.
How can it be fair if the biggest prizes of all aren’t even random?
Here’s an image of the procurement document that the Massachusett’s lottery used to elicit bids from ticket printers:
You’ll see that they require the grand prizes to be distributed evenly throughout the game.
Note that “distributed evenly throughout the game” is not random.
If the prizes were random, then they might all appear at the start of the game. Or they might all appear at the end of a game.
But the state doesn’t want that to happen. If all of the grand prizes were claimed at the start of the game, then people would stop playing the game because they would have no shot at the big money.
You can take advantage of this fact by figuring out how many tickets are in a “pool” where a grand prize should be. If there are 9,000,000 tickets and 3 grand prizes, then divide 9,000,000 by 3 to figure out that there must be 1 grand prize every 3,000,000 tickets.
Are Scratch Offs Worth It Reddit
Then, use the state’s lottery website to figure out how many tickets remain. Most states publish this information for each game.
In the example game just mentioned, if there were 7,000,000 tickets remaining and still 3 remaining grand prizes, then you know the first grand prize must be in the next 1,000,000 tickets. Your odds just improved from 1 in 3,000,000 to 1 in 1,000,000.
That may not seem like much, but it can mean the difference between negative and positive expected value.
Is There A Limit To The Number Of Big Winning Tickets In A Roll?
Here’s an image from documents filed as part of a Texas lawsuit against the state and the ticket printer:
In this contract that Texas has with IGT, there’s a clause that states that there can be no more than a certain number of $25-$50 winners per pack of tickets. There’s another clause that states there can be no more than one winner of $75 and higher per pack. (The “one” is redacted, but we can deduce that tit’s one by looking at the word following the redaction, which is “winner” rather than “winners”).
How can you use this to your advantage?
Buy only one ticket from a pack at a time and scratch it right there at the store.
If it happens to be a big winner, don’t buy any more tickets from that pack.
What Is The Minimum Payback for a Roll of Scratch-off Tickets?
This next image is from the request for a proposal from the New Mexico lottery association to ticket printers:
It shows that each pack of tickets has some guaranteed payout. The details of the guaranteed payout aren’t specified, but from other contracts and personal experience, I’ve found it to typically be about 50% of the price of a pack of tickets. If an entire roll of tickets costs $600, then the GLEP is usually about $300.
What this means for the advantage player is that you should not stop buying after a string of losers.
Since each roll of tickets is guaranteed to have a certain minimum payout, then every loser you see increases the chance that the remaining tickets are winners.
Conclusion
While none of the above insights will guarantee you will win, they are just a few of the things you can do for yourself if you want to know how to beat scratch-offs.
Combine these insights with some expected value calculations from the remaining prizes that get displayed on the state lottery websites and you’ll be doing way better than the average lotto player.
Good luck.
About the Author
Eric Ihli, a professional gambler/programmer, spent 10 years as a full-time professional gambler and 5 years as a software engineer. He now combines those two passions by writing software to discover and evaluate profitable gambling opportunities.