Monday, November 26, 2012

Public Sector vs. Private Sector: Powerball Edition ($425 Million?)

A dollar and a dream, the government tells you...

Actually, for Powerball, the price of a dream is now $2-, as they doubled the minimum wager a few months back.  You know,  in order to allow for bigger jackpots which would attract more players, they told us reasonably.  Although it could just be that the governing body figured that with so many low-income Americans hooked on the game, they could probably double the cost without losing many players....

You know, like drug dealers do to their strung-out customers.

I was checking the payouts on the most recent set of Powerball numbers, and something jumped out at me -actually, two things, specifically eighth and ninth place:

There are 35 numbers in the "Power Ball" selection field of Powerball.   Your odds of winning appear to be 1 in 35, although many sites calculate them to be somewhere in the 55-1 range.  Yet the payoff is merely $4 on a $2 bet, meaning that they are paying you only 2-1 on 35-1 odds.

Now I'm not saying the house doesn't deserve a little edge.  That's how your (occasionally) free drink gets served to you by a pretty girl in a bunny outfit.  Let's use roulette as a comparison betting game offered by the private sector, and look at the payouts and odds:

So roulette pays 35-1 off of 37 numbers, giving the house an edge of just over 5%.  With Powerball, the house edge has been calculated to be closer to 50%...and it only pays off 2-1.

And why, pray tell, does getting 1 match + Powerball still offer the same 2-1 payout, when the odds have increased here to 110-1?

Look, I'm not saying you shouldn't play Powerball this week.  All I am saying is that gambling, like virtually every other function of civil society, is best handled by the private sector.  Once handled by the government, the odds escalate, the payouts shrink, and the price of a wager keep rising...

Remember - the lottery, aka the "numbers game" or "running numbers", was first introduced into America by the Mafia, whose house advantage was somewhere between 20%-40%, depending on the local variation of the game being played.  It was your friendly federal government that shut these games down, and instituted a "legal" version that would give the states a monopoly on the action - still preying on the working stiffs, of course, but making the odds longer and the price higher...

I'll leave you with a final thought, courtesy of George Orwell:

“The Lottery, with its weekly pay-out of enormous prizes, was the one public event to which the proles paid serious attention. It was probable that there were some millions of proles for whom the Lottery was the principal if not the only reason for remaining alive. It was their delight, their folly, their anodyne, their intellectual stimulant. Where the Lottery was concerned, even people who could barely read and write seemed capable of intricate calculations and staggering feats of memory. There was a whole tribe of men who made their living simply by selling systems, forecasts, and lucky amulets. Winston had nothing to do with the Lottery, which was managed by the Ministry of Plenty, but he was aware (indeed everyone in the party was aware) that the prizes were largely imaginary. Only small sums were actually paid out, the winners of the big prizes being nonexistent persons.

~George Orwell, 1984

Hey - good luck Wednesday...


Anonymous said...

Pennsylvania runs a "Millionaire Raffle" twice a year. They sell 500,000 tickets at $20 per. They promote the top prize odds as:
with 4 tickets only winning the top prize of $1,000,000

It is horrible on how they prey on those least able to afford it.

Anonymous said...

And the money doesn't really "go" to education, as they often claim. They budget in "$100M expected in lottery revenues" under education. It's not supplemental - it is now a line-item. If people ever got wise tot he game, certain states would see their education systems go bankrupt.