A Method for Winning at Lotteries

31 Pages Posted: 15 Jul 2017  

Steven Douglas Moffitt

Stuart School of Business, Illinois Institute of Technology

William T. Ziemba

University of British Columbia (UBC) - Sauder School of Business

Date Written: July 7, 2017

Abstract

We report a new result on lotteries -- that a well-funded syndicate has a purely mechanical strategy to achieve expected returns of 10% to 25% in an equiprobable lottery with no take and no carryover pool. We prove that an optimal strategy (Nash equilibriumn) in a game between the syndicate and other players consists of betting one of each ticket (the "trump ticket"), and extend that result to proportional ticket selection in non-equiprobable lotteries. The strategy can be adjusted to accommodate lottery taxes and carryover pools. No "irrationality" need be involved for the strategy to succeed -- it requires only that a large group of non-syndicate bettors each choose a few tickets independently.

Keywords: Lottery, Nash Equilibrium, Gambling, Optimal Betting Strategies, Efficiency, Parimutuel, Lotto, Trump Ticket

JEL Classification: C70, C71, C72, G14, Z23

Suggested Citation

Moffitt, Steven Douglas and Ziemba, William T., A Method for Winning at Lotteries (July 7, 2017). Available at SSRN: https://ssrn.com/abstract=2999480

Steven Douglas Moffitt (Contact Author)

Stuart School of Business, Illinois Institute of Technology ( email )

10 West 35th Street, 18th Floor
Chicago, IL 60616
United States
630-660-0400 (Phone)

William T. Ziemba

University of British Columbia (UBC) - Sauder School of Business ( email )

2053 Main Mall
Vancouver, BC V6T 1Z2
Canada
604-261-1343 (Phone)
604-263-9572 (Fax)

HOME PAGE: http://williamtziemba.com

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