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|This would be the seventh largest Powerball payout. |
|This would be the seventh largest Powerball payout. |
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Alottery is a popular form of gambling which involves the drawing of lots for a prize. Some governments forbid it, while others endorse it to the extent of organizing a national lottery. It is common to find some degree of regulation of lottery by governments.
The first signs of a lottery trace back to the Han Dynasty between 205 and 187 B.C., where ancient Keno slips were discovered. The lottery has helped finance major governmental projects like the Great Wall of China.
Lotteries come in many formats. The prize can be fixed cash or goods. In this format there is risk to the organizer if insufficient tickets are sold. The prize can be a fixed percentage of the receipts. A popular form of this is the "50-50" draw where the organizers promise that the prize will be 50% of the revenue. The prize may be guaranteed to be unique where each ticket sold has a unique number. Many recent lotteries allow purchasers to select the numbers on the lottery ticket resulting in the possibility of multiple winners (as well as no winners at all).
Lotteries are most often run by governments or local states and are sometimes described as a regressive tax, since those most likely to buy tickets will typically be the less affluent members of a society. The astronomically high odds against winning have also led to the epithets of "idiot tax," "tax on stupidity," or "math tax." The phrases are largely rhetorical (playing the lottery is voluntary; taxes are not), but it is intended to suggest that lotteries are governmental revenue-raising mechanisms that will attract only those consumers who fail to see that the game is a very bad deal. Indeed, the desire of lottery operators to guarantee themselves a profit requires that a lottery ticket be worth substantially less than what it costs to buy. After taking into account the present value of the lottery prize as a single lump sum cash payment, the impact of any taxes that might apply, and the likelihood of having to share the prize with other winners, it is not uncommon to find that a ticket for a typical major lottery is worth less than one third of its purchase price.
The fact that lotteries are commonly played leads to some contradictions against standard models of economic rationality. However, the expectations of some players may not be to win the game, but the thrill and indulgence in a fantasy of possibly becoming wealthy become the goal. This is particularly popular among those who believe their chances of becoming rich are already zero, so even if the lottery's odds are awful, they are better than zero.
Lottery tickets are usually scanned in big numbers using marksense-technology.
In several countries, lotteries are legalized by the governments themselves. In addition, with the explosion of the internet, several online web only lotteries and traditional lotteries with online payments too have surfaced. In the web only lotteries, the user has to select his pick and either watch an ad for a few seconds before his pick is confirmed or has to click on a web banner/link to register his pick in the system. The numbers may be drawn by the site that runs the online lotto or might be linked to a major physical lotto draw to ensure reliability. Prize money ranges from $100,000 to $10 million. Examples of free lotto sites: Freelotto and Lucky Surf.
In the United States, the existence of lotteries is subject to the laws of each state; there is no national lottery. Before the advent of state-sponsored lotteries, many illegal lotteries thrived; for example, see Numbers game and Peter H. Matthews. The first modern state lottery in the U.S. was established in the state of New Hampshire in 1964; today, lotteries are established in forty-one states and the District of Columbia. On October 8, 1970, New York held the first million dollar lottery drawing.
The first modern interstate lottery in the U.S. was Tri-State Lotto. Tri-State Lotto was formed in 1985 and linked the states of Maine, New Hampshire and Vermont. In 1988, the Multi-State Lottery Association was formed with Oregon, Iowa, Kansas, Rhode Island, West Virginia and the District of Columbia as its charter members; it is best known for its "Powerball" drawing, which is designed to build up very large jackpots. Another interstate lottery, The Big Game (now called Mega Millions), was formed in 1996 by the states of Georgia, Illinois, Massachusetts, Maryland, Michigan and Virginia as its charter members.
Instant tickets, also known as scratchcards, were first introduced in the 1970s and have since become a major source of state lottery revenue. Some states have introduced keno and video lottery terminals (slot machines in all but name).
Other interstate lotteries include: Hot Lotto, Lotto South, and Wild Card 2.
With the advent of the Internet it became possible for people to play lottery-style games on-line, many times for free (the cost of the ticket being supplemented by merely seeing, say, a pop-up ad). Two of the many websites which offer free games (after registration) include www.iwinweekly.com and the larger iWon.com, which is a wholly-owned subsidiary of IAC Search & Media. GTech Corporation, in the United States, administers 70% of the worldwide online and instant lottery business, according to its website.
Nowadays, many state lotteries in the USA donate large portions of their proceeds to the public education system. Sometimes these funds replace instead of supplement conventional funding ultimately resulting in no additional money for education.
The first lottery in Canada was Quebec's Inter-Loto in 1970. Other provinces and regions introduced their own lotteries through the 1970s, and the federal government ran Loto Canada (originally the Olympic Lottery) for several years starting in the late 1970s to help recoup the expenses of the 1976 Summer Olympics. Lottery wins are generally not subject to Canadian tax, but may be taxable in other jurisdictions, depending on the residency of the winner.[3]
Today, Canada has two nation-wide lotteries: Lotto 6/49 (which started in 1982), and Lotto Super 7 (which started in 1994). These games are administered by the Interprovincial Lottery Corporation, which is a consortium of the five regional lottery commissions, all of which are owned by their respective provincial and territorial governments:
The first known lottery in France was created by King Francis I in or around 1505. After that first attempt, lotteries were forbidden for two centuries.
They reappeared at the end of 17th century, as a "public lottery" for the Paris municipality (called Loterie de L'Hotel de Ville) and as "private" ones for religious orders (mostly for nunsinconvents).
Lotteries became quickly one of the most important resources for religious congregations in the 18th century.
Lotteries helped to build or rebuild many churches (about 15 including the biggest ones) in Paris during the 18th century, including St Sulpice and Le Panthéon.
At the beginning of the century, the King avoided having to fund religious orders by giving them the right to run lotteries, but the amounts generated became so large that the second part of the century turned into a struggle between the monarchy and the Church for control of the lotteries. In 1774, the Loterie de L'École Militaire was founded by the monarchy (to buy what is called today the Champ de MarsinParis, and build a Military Academy that Napoleon Bonaparte would later attend) and all other lotteries, with 3 or 4 minor exceptions, were forbidden.
This lottery became known a few years later as the Loterie Royale de France. Just before the French Revolution in 1789 the revenues from La Lotterie Royale de France were equivalent to between 5 and 7% of total French revenues.
Throughout the 18th century, philosophers like Voltaire as well as some bishops complained that lotteries exploit the poor. This subject has generated much oral and written debate over the morality of the lottery.
All lotteries (including state lotteries) were frowned upon by idealists of the French Revolution, who viewed them as a method used by the rich for cheating the poor out of their wages.
The Lottery reappeared in France in 1936, called loto, when socialists needed to increase state revenue. Since that time, La Française des Jeux (government owned) has had a monopoly on most of the games in France, including the lotteries.
Lotteries in New Zealand are controlled by the New Zealand government. A state owned trading organisation, the New Zealand Lotteries Commission, operates low prize scratch ticket games and powerball type lotteries with weekly prize jackpots. Lottery profits are distributed by The New Zealand Lottery Grants Board's directly to charities and community organisations. Sport and Recreation New Zealand, Creative New Zealand, and the New Zealand Film Commission are statutory bodies that operate autonomously in distributing their allocations from the Lottery Grants Board.
The lotteries are drawn on Saturday and Wednesday. Lotto is sold via a network of computer terminals in shopping centers across the nation. The Lotto game was first played in 1987 and replaced New Zealand's original national lotteries, the Art Union and the Golden Kiwi. Lotto is a pick 6 from 40 numbers game. The odds of winning the first division prize of around NZ$300,000 to NZ$2 million are 1 in 3,838,380.
The Powerball game is the standard pick 6 from 40 lotto numbers with an additional pick 1 from 8 powerball number. This game has odds of 1 in 30,707,040 and a first prize of between NZ$1million and NZ$15million. Big Wednesday is a game played by picking 6 numbers from 45 plus heads or tails from a coin toss. A jackpot cash prize of NZ$1million to NZ$15 million is supplemented with product prizes such as Porsches, boats and holiday homes. The odds of winning first prize are 1 in 16,290,120. Results services for these games can be found at NZ Lotto Results.
The chances of winning a lottery jackpot are principally determined by several factors: the count of possible numbers, the count of winning numbers drawn, whether or not order is significant and whether drawn numbers are returned for the possibility of further drawing.
In a typical 6 from 49 lotto, 6 numbers are drawn from 49 and if the 6 numbers on a ticket match the numbers drawn, the ticket holder is a jackpot winner - this is true regardless of the order in which the numbers are drawn. The odds of being the jackpot winner are approximately 1 in 14 million (13,983,816 to be exact). The derivation of this result (and other winning scores) is shown in the Lottery mathematics article. To put these odds in context, suppose one buys one lottery ticket per week. 13,983,816 weeks is roughly 269,000 years; In the quarter-million years of play, one would only expect to win the jackpot once.
The odds of winning any actual lottery can vary widely depending on lottery design. "Powerball" is a very popular multistate lottery in the United States which is known for jackpots that grow very large from time to time. This attractive feature is made possible simply by designing the game to be extremely difficult to win: 1 chance in 146,107,962. That's over ten times smaller than the example above. Powerball players also pick six numbers, but two different "bags" are used. The first five numbers come from one bag that contains numbers from 1 to 55. The sixth number -- the "Powerball number" -- comes from the second bag, which contains numbers from 1 to 42. To win a powerball jackpot, a player's five regular numbers must match the five regular numbers drawn and the Powerball number must match the Powerball number drawn. In other words, it is not good enough to pick 10, 18, 25, 33, 42 / 7 when the drawing is 7, 10, 25, 33, 42 / 18. Even though the player picked all the right numbers, the Powerball number at the end of the ticket doesn't match the one drawn, so the ticket would be credited with matching only four numbers (10, 25, 33, 42).
Most lotteries give lesser prizes for matching just some of the winning numbers. The Powerball game described above is an extreme case, giving a very small payout (US$3) even if a player matches only the Powerball number at the end of your ticket. Matching more numbers, the payout goes up. Although none of these additional prizes affect the chances of winning the jackpot, they do improve the odds of winning something and therefore add a little to the value of the ticket.
In the UK National Lottery the smallest prize is £10 for matching three balls. There exists a Wheeling Challenge to create the smallest set of tickets to cover enough combinations to ensure that any 6 numbers drawn will match against at least 3 numbers on at least one of the tickets. The current record is 163 tickets.
The expected value of lottery bets is often notably bad. In the United States, an expected value of -50% is not atypical.
| Prize | Lottery | Country | Name | Date | Notes |
|---|---|---|---|---|---|
| $365m (€306m, £210m) | Powerball | United States | One ticket bought jointly by eight co-workers at a Nebraska meat processing plant | 18 February 2006 | World's largest lottery jackpot prize |
| $363m (€291.21m, £200m) | The Big Game | United States | Two winning tickets: Larry and Nancy Ross (Michigan), Joe and Sue Kainz (Illinois) | 9 May 2000 | The Big Game is now named Mega Millions |
| $254m (€195m, £128m) | Powerball | United States | [[4]] | 24 January 2007 | This would be the seventh largest Powerball payout. |
| €183m ($220m, £124.8m) | EuroMillions | France(2), Portugal(1) | Three ticket holders | 3 February 2006 | Europe's largest jackpot |
| €115m ($142.4m, £77m) | EuroMillions | Ireland | Dolores McNamara | 29 July 2005 | Europe's largest single winner and the world's largest single payout |
| €71.8m ($91.6m, £48m) | SuperEnalotto | Italy | One ticket bought jointly by ten bar customers in Milan | 4 May 2005 | Largest Italian prize |
| £42m (€60.3m, $74.7m) | National Lottery | United Kingdom | Three ticket holders | 6 January 1996 | Largest UK prize |
| £20.1m (€28.8m, $35.7m) | National Lottery | United Kingdom | Iris Jeffrey | 14 July 2004 | Biggest single winner (UK) |
| $850,000 | Powerball | United States | Senator Judd Gregg | 20 October 2005 | Public Figure |
Sources: http://www.usamega.com/archive-052000.htm http://news.bbc.co.uk/1/hi/world/europe/4746057.stm http://news.bbc.co.uk/1/hi/uk/4676172.stm http://news.bbc.co.uk/1/hi/world/americas/4740982.stm http://www.sisal.it/se/se_main/1,4136,se_Record_Default,00.html http://www.channel3000.com/news/10838542/detail.html
On 20 September 2005 a primary school boy in Italy won £27.6 million in the national lottery. Although children are not allowed to gamble under Italian law, children are allowed to play the lottery. [5]
Winnings are not necessarily paid out in a lump sum, contrary to the expectation of many lottery participants. In certain countries, such as the USA, the winner gets to choose between an annuity payment and a one-time payment. The one-time payment is much smaller, indeed often only half, of the advertised lottery jackpot, even before applying any withholding tax to which the prize may be subject. The annuity option provides regular payments over a period that may range from 10 to 40 years.
In some online lotteries, the annual payments can be as little as $25,000 over 40 years, with a balloon payment in the final year. This type of installment payment is often made through investment in government-backed securities. Online lotteries pay the winners through their insurance backup. However, many winners choose to take the lump-sum payment, since they believe they can get a better rate of return on their investment elsewhere.
In some countries, lottery winnings are not subject to personal income tax, so there are no tax consequences to consider in choosing a payment option. In Canada, Australia, and the United Kingdom all prizes are immediately paid out as one lump sum, tax-free to the winner.
Lottery, like any form of gambling, is susceptible to fraud, despite the high degree of scrutiny offered by the organizers. One method involved is to tamper with the machine used for the number selection. By rigging a machine, it is theoretically easy to win a lottery. This act is often done in connivance with an employee of the lottery firm. Methods used vary; loaded balls where select balls are made to pop-up making it either lighter or heavier than the rest. Many other ingenious methods too have been employed.
Some advance fee fraud scams on the Internet are based on lotteries. The modus operandi of this fraud is that the trickster sends spam to all email users in their database congratulating them on their recent lottery win. Then they proceed to announce that in order to release funds they must part with a certain amount (as tax/fees) as per the rules or risk forfeiture.
Another form of lottery scam involves the selling of "systems" which purport to improve a player's chances of selecting the winning numbers in a Lotto game. These scams are generally based on the buyer's (and perhaps the seller's) misunderstanding of probability and random numbers. Sale of these systems or software is legal, however, since they mention that the product cannot guarantee a win, let alone a jackpot.
