A Method for Winning at Lotteries
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 equilibrium) 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.
Cite
@article{arxiv.1801.02958,
title = {A Method for Winning at Lotteries},
author = {Steven D. Moffitt and William T. Ziemba},
journal= {arXiv preprint arXiv:1801.02958},
year = {2018}
}
Comments
20 pages, 2 figures, submitted to Games and Economic Behavior