31 Pages Posted: 15 Jul 2017
Date Written: July 7, 2017
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: 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