please empty your brain below

A masterly exposition of "real statistik". In part,the gap between punter's cash input and output arises from the fact that the most consistent way to make money on the lottery is to own or be able to tax the lottery. This was discovered I believe by the Mafia with the "numbers" racket and gleefully adopted by governments all over the world eversince.
More like a curious adoption of pop-statistics when it suits? Because of course, you could live for 1,000 years playing each time and get not a single penny. The interesting thing would be to see at what point, were you to play the same numbers each time the point arrives where it will become more probable that you will win.
The expected value for most lotteries is about 50%, so Camelot were actually being a bit generous up until now.

I wonder how inelastic the demand is, especially when we have a situation of no granularity. Usually when the price of something rises, you'd expect fewer people to buy it. If you bought 2 tickets each time, you might buy 1 now. But if you bought 1 ticket each time, you can't buy half a ticket, and I don't know whether people would be disciplined enough to reduce their frequency of playing - especially when the prizes have gone "up".

Well, it's still true that someone has to win, and if you don't play, you can't win.
Ah lotteries. A stealth tax on the poor who don't understand statistics.
You haven't taken account of Sod's Law.
Obviously the lottery is not a good investment, but I can see its attraction as a relatively cheap amusement, with the added frisson of a tiny chance of winning a life-changing amount of money. I don't play (so in a sense I win every week) but I can understand why some people do.
Currently average weekly sales are about 23M, so your estimate of 50 winning raffle tickets is probably an overestimate.

dg writes: Point taken. Table amended.

Of course, people don't play the lottery for the chance to win £1000 - the big prizes are the attraction, however unlikely.

And if you're not a banker or a footballer, it's the only way you'll ever become a millionaire, save for moving to Turkey.
All this maths first thing in the morning is not good for my poor brain!

I bet you were one of those who could always figure out the answer to the "if a train travels westwards at 60mph and another travels eastwards at 80mph, how long will it take to fill the bathtub with water" type of questions too, weren't you! :)

Bottom line: I shan't bother to start buying lottery tickets. Thanks!
If you bought every combination of six numbers that would of course increase the jackpot amount... and buying every combination of six numbers won't necessarily mean you will hold all possible combinations of raffle numbers! So the 2013 expected winnings total might need tweaking a bit :)
"And if you're not a banker or a footballer, it's the only way you'll ever become a millionaire"

That's untrue. But also why so many people 'play'.
Premium Bonds for ever! At least you can get your stake money back.
Your 60% return figure for the current draw is based on the average prize values. However Camelot's official rules for the current draw say that the prizes are adjusted so that 45% of sales will be available to be paid out in prizes. So they take the 45% return and work backwards in calculating the prizes. I'm not sure if this prize fund/sales percentage will actually change under the new draw.

When I was younger and got to thinking that gambling was an easy way to make money, my mother asked me to note whether the local bookmaker walked to work or drove a car, and what sort of car he drove. (He drove a Daimler.) She then asked me to think about who set the odds the punters were paid, and who then ultimately paid for his Daimler?

Betting only really benefits the bookmaker, in the long run. Oh, and the government in betting tax.
Could you win?, maybe it's a lottery hehehe. £2 that's too much.
This sort of interesting analysis is why I love your blog DG. Bravo.
@ian, DG

The lottery website states 'at least 50 lottery raffle winners'
I've long given up with National Lottery. Years of never even getting 1 number was depressing.
Just do the Euro, at least it's easier to win a few quid.
Like tonight, 2 number & a lucky star only be about £7.00, but at least it's a win.
Little victories!!
I haven't bought a ticket for many years. I can therefore never check the results, just in case they include 1, 7, 15, 39, 44. Would be too painful...

Great post.
Nails UK: I doubt the prize fund percentage will change, as it is prescribed in law, and the same for all online games IIRC, with the possible exception of EuroMillions.

This, incidentally, is why the EuroMillions raffle exists - it's to counter the exchange rate difference between €2 and £2. And the reason they sometimes do superdraws or extra raffles like they did over Christmas is because the figures don't add up perfectly.
So, am I right in assuming that if everybody carries on playing exactly as before, but now paying double the amount, that Camelot will now make twice as much from the Lottery?

A lot of people will initially cut back on the amount of tickets they buy. No doubt, over time, many of them will return to buying there current amount of tickets, but I'm sure that there will still be a significant reduction in sales.

There is only so much money people can afford to spend. When the lottery first came out, I seem to recall that the Saturday jackpot (no rollover) was regularly around 8 - 11+ million pounds. Some of this may have been due to the novelty value and some sales were lost afterwards.

Camelot then necame greedy and introduced the Wednesday lottery. I think the jaackpot averaged around £4 million. The Saturday jackpot dropped as a consequence. The euro lottery and all the other lottery variations have also been introduced over time. As a consequence, people have bought less of the ordinary lottery tickets, reducing the jackpots to the pitiful amounts that they are today.

TridentScan | Privacy Policy