Wired has a fascinating article about a statistician who figured how to beat the odds on the scratch-off lottery tickets–that is, pick cards that are more likely to produce winning combinations. And “more likely”, I mean getting it right up to 95 percent of the time.
But the article mentions only in passing the real problem with lotteries:
While approximately half of Americans buy at least one lottery ticket at some point, the vast majority of tickets are purchased by about 20 percent of the population. These high-frequency players tend to be poor and uneducated, which is why critics refer to lotteries as a regressive tax. (In a 2006 survey, 30 percent of people without a high school degree said that playing the lottery was a wealth-building strategy.) On average, households that make less than $12,400 a year spend 5 percent of their income on lotteries–a source of hope for just a few bucks a throw.
It might be a “source of hope”, but it’s a rigged and losing deal. Worse, the article presents some anecdotal evidence that organized crime is using these tickets to launder illegal profits. With a low payout, ordinarily buying tickets wouldn’t be a good deal–they would lose about half of their money. But if you can predict winners, especially in high payout games, this can actually turn a profit.
The irony is that state-run lotteries, while currently viewed as a source of revenue (the proceeds often go to school funding), were originally devised as a way to harm organized crime by destroying the numbers rackets.