## Consumer Matters

December 16, 2015 8:25 pm
Updated: December 17, 2015 12:20 am

# Statistics professor wants consumers to scratch lotteries off their Christmas shopping list

WATCH: One Simon Fraser University professor says giving someone a lottery ticket for a Christmas present is like giving someone a worthless piece of cardboard. Anne Drewa explains.

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Lottery tickets, including scratch-and-wins are known as the ultimate last-minute stocking stuffer, readily available in most shopping centres, cheap and has the potential to turn one dollar into millions. According to the BC Lottery Corporation (BCLC), weekly scratch-and-win sales increase by 35 per cent during the holiday season.

A professor from Simon Fraser University (SFU), however, is advising consumers to scratch them off their Christmas shopping list. Statistics and actuarial science professor Tom Loughin says the whole game is rigged against the player.

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Before you go shopping for last-minute lottery stocking stuffers, “be aware of what it is you’re getting into,” cautions Loughin, “Know that if somebody is running a game where they’re giving out money and it’s not a charity, then they’re the ones who are making the money. You, on average, are losing the money.”

Based on Loughin’s data, your return on investment for buying a lotto ticket is -32 per cent. Suppose you pay \$20 for each ticket, he says, you would then get back an average of only \$13.55. That means, on average, you are you losing \$6.45 per card.

“If you want to spend \$10, \$20 on a gift for a friend, and there’s a fair chance that what you’ve given them is a blank piece of cardboard,” he adds.

The odds of winning the jackpot are so low, according to Loughin, that if you played one entry every week, you’d need to live to be over 186,000 years to have half the chance of ever winning it. And by that time, you’d have spent more than \$29 million.

“The lottery is a tax on people who don’t understand the math. It’s a way that organizations can make money by the fact that some people don’t really quite understand where their money is going,” says Loughin.

### The Expected Value

To prove his findings, Loughin calculated the odds of winning the big jackpot in BCLC’s ‘Holiday gift pack’ and the different prize levels, by calculating what the “expected value” of each card you purchased would bring in. The gift pack boasts a top prize of \$150,000. The expected value is calculated by taking each prize amount and dividing it by the odds of winning. The result is the average amount each card would be worth.

“I think that a lot of people don’t quite understand that these prizes that seem so big occur so rarely that your chance of actually making back your money on the card is poor,” says Loughin.

Loughin’s study also found that the most popular times for people to buy lottery tickets are when the jackpot gets disproportionately large. During the Christmas season, when more people are playing, there’s a higher potential for smaller, major prizes.

“It’s a completely random game. There’s nothing you can do to alter the chance that you win,” says Loughin, “But if you do win one of the larger prizes there’s a higher chance that you’ll be sharing it with people.”

If you’re buying the lotto and scratch cards to give your loved one the fantasy of winning big, Loughin says go ahead, but he also adds, “people say you can’t win if you don’t play. Remember that playing costs money.”