Comments on: Why Cash WinFall is a model for future lottery games http://blogs.reuters.com/felix-salmon/2012/08/10/why-cash-winfall-is-a-model-for-future-lottery-games/ A slice of lime in the soda Sun, 26 Oct 2014 19:05:02 +0000 hourly 1 http://wordpress.org/?v=4.2.5 By: TinyTim1 http://blogs.reuters.com/felix-salmon/2012/08/10/why-cash-winfall-is-a-model-for-future-lottery-games/comment-page-1/#comment-42587 Mon, 13 Aug 2012 16:16:17 +0000 http://blogs.reuters.com/felix-salmon/?p=17046#comment-42587 “Cash WinFall was also a 40% tax on the rich professional bettors who played only during roll-down weeks”

Sorry but that is 100% wrong.
If you are down 40% then you can’t be up 15%.

Cash Windfall was an EVEN-MORE highly-regressive tax than other lotteries.

This is a terrible post.

The losers from non-jackpot weeks were subsidising the professionals.

If the professionals hadn’t played then the regular non-professionals would have shared more of the tickle-down from the had-to-be-won jackpot money.

This is very simple maths.

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By: TinyTim1 http://blogs.reuters.com/felix-salmon/2012/08/10/why-cash-winfall-is-a-model-for-future-lottery-games/comment-page-1/#comment-42586 Mon, 13 Aug 2012 16:02:10 +0000 http://blogs.reuters.com/felix-salmon/?p=17046#comment-42586 “Cash WinFall was also a 40% tax on the rich professional bettors who played only during roll-down weeks”

Sorry but that is 100% wrong.
If you are down 40% then you can’t be up 15%.

Cash Windfall was an EVEN-MORE highly-regressive tax than other lotteries.

This is a terrible post.

The losers from non-jackpot weeks were subsidising the professionals.

If the professionals hadn’t played then the regular non-professionals would have shared more of the tickle-down from the had-to-be-won jackpot money.

This is very simple maths.

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By: TinyTim1 http://blogs.reuters.com/felix-salmon/2012/08/10/why-cash-winfall-is-a-model-for-future-lottery-games/comment-page-1/#comment-42585 Mon, 13 Aug 2012 16:00:07 +0000 http://blogs.reuters.com/felix-salmon/?p=17046#comment-42585 “Cash WinFall was also a 40% tax on the rich professional bettors who played only during roll-down weeks”

Sorry but that is 100% wrong.
If you are down 40% then you can’t be up 15%.

Cash Windfall was an EVEN-MORE highly-regressive tax than other lotteries.

This is a terrible post.

The losers from non-jackpot weeks were subsidising the professionals.

If the professionals hadn’t played then the regular non-professionals would have shared more of the tickle-down from the had-to-be-won jackpot money.

This is very simple maths.

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By: k9quaint http://blogs.reuters.com/felix-salmon/2012/08/10/why-cash-winfall-is-a-model-for-future-lottery-games/comment-page-1/#comment-42584 Sun, 12 Aug 2012 09:00:23 +0000 http://blogs.reuters.com/felix-salmon/?p=17046#comment-42584 State sponsored lotteries are usually more about psychology than math. As long as the lottery profits and the proceeds are used by local governments for projects with social benefits (a dubious premise in MA), it should attempt to maximize revenue. It boils down to a simple question about human nature:
Is it better to tax someone 40% and have them be happy to pay the tax? Or is it better to tax them 24% and have them be furious that they must pay it?

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By: TFF http://blogs.reuters.com/felix-salmon/2012/08/10/why-cash-winfall-is-a-model-for-future-lottery-games/comment-page-1/#comment-42582 Sat, 11 Aug 2012 18:42:07 +0000 http://blogs.reuters.com/felix-salmon/?p=17046#comment-42582 Curmudgeon, you have some good points there. I would prefer not to sponsor gambling. I would especially prefer not to spend money on advertising promoting gambling.

The Massachusetts Lottery is a crooked organization, a tool for the self-enrichment of political hacks. So I definitely am inclined to treat anything they do with skepticism.

But beyond that, I disagree that the purpose of the state lottery should be to maximize revenues. If it provides a legitimate service by offering an honest game, then that ought to be the focus. The money raised should be secondary.

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By: Curmudgeon http://blogs.reuters.com/felix-salmon/2012/08/10/why-cash-winfall-is-a-model-for-future-lottery-games/comment-page-1/#comment-42578 Sat, 11 Aug 2012 14:24:39 +0000 http://blogs.reuters.com/felix-salmon/?p=17046#comment-42578 Yes, TFF, I was incorrect in my last post. But reducing the payout may have other undesirable characteristics from the standpoint of maximizing revenue. I dislike gambling and especially government-sponsored lotteries. But I’m in a minority, so the only way I can show my dislike is by not participating. I’m also an applied mathematician by training, and there is no logic to gambling.

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By: BarryKelly http://blogs.reuters.com/felix-salmon/2012/08/10/why-cash-winfall-is-a-model-for-future-lottery-games/comment-page-1/#comment-42575 Sat, 11 Aug 2012 11:42:30 +0000 http://blogs.reuters.com/felix-salmon/?p=17046#comment-42575 I think you completely missed the point here, Felix, and you don’t frequently do that.

The outrage doesn’t come from the state not making enough money. It comes from the fact that having access to extra capital increases the probability of winning disproportionately, such that your expected payout is positive; and that payout comes at the expense of people who can’t follow the same strategy. Sure, only buying tickets on the roll down weeks would have expected positive return, but you can’t depend on actually making a profit in a reasonable timescale without buying a whole lot of tickets.

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By: y2kurtus http://blogs.reuters.com/felix-salmon/2012/08/10/why-cash-winfall-is-a-model-for-future-lottery-games/comment-page-1/#comment-42571 Sat, 11 Aug 2012 03:15:18 +0000 http://blogs.reuters.com/felix-salmon/?p=17046#comment-42571 Felix is exactly right Cash Winfall is one of the best designed lotteries which has ever existed.

The state of Mass advantaged itself in two ways:

#1 even before the game changing globe articles the word was out on the street that orginized syndicates were playing the lottery because it was “profitable.” This pulled in tens of thousands of small fish.

#2 Lots of the “smart money” was comming in from out of state. It’s rare for a state to pull in serious outside money into a local lottery. This point was slyly left out of the inspector generals report Mass was tickled pink that out of state players were dumping money into Mass.

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By: TFF http://blogs.reuters.com/felix-salmon/2012/08/10/why-cash-winfall-is-a-model-for-future-lottery-games/comment-page-1/#comment-42569 Sat, 11 Aug 2012 01:02:01 +0000 http://blogs.reuters.com/felix-salmon/?p=17046#comment-42569 Nathan and circus put it better than I did…

Curmudgeon, Nathan is already subtracting the $40M from the revenues. You can forgo that revenue, and by reducing the payout rate come up with a scenario that is still better for both the small-time gamblers and for the state.

Felix may be right that this approach is attractive to lottery officials. They aren’t interested in giving money to the towns. They aren’t interested in returning money to their bettors. Their sole interest is to increase the revenue stream, and thereby justify their own worthless lives. (I take that back. They are occasionally interested in funding their political campaigns with those revenues under the guise of “advertising”.)

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By: Nathan_M http://blogs.reuters.com/felix-salmon/2012/08/10/why-cash-winfall-is-a-model-for-future-lottery-games/comment-page-1/#comment-42568 Fri, 10 Aug 2012 22:07:46 +0000 http://blogs.reuters.com/felix-salmon/?p=17046#comment-42568 Curmudgeon, the basic point is that the state could make more and the small times players could also make more without the $40m revenue from the sophisticated players.

It’s better for both the state and the small time players for the lottery to be structured better and have $260m in revenue than it is to have the existing structure and an additional $40m in revenue from sophisticated players.

The existing structure may have maximizing lottery tickets sales, but that is not the goal. The goal is to maximize proceeds to the state and that goal was not achieved.

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