When Scratch-Off Lottery Cards Offer Zero Payoff
The lottery, of course, is the moron's bet, a surefire way for anyone who knows his way around statistics to feel vastly superior to the mere mortals who line up at convenience stores to discard their hard-earned dollars.
The odds against winning big are so terrifically high that you'd be better off eating your dollars and hoping that your body magically transforms them into gold.
The statistical folly of state lotteries obviously isn't enough to dissuade millions from hoping for a miracle. Now comes a business professor at Washington and Lee University in Virginia with a design on a lottery that offers far better odds: The court system.
Scott Hoover, who teaches Investments, Managerial Finance and Applied Statistics in Washington and Lee's school of commerce, economics and politics, did a little computing and determined that the Virginia Lottery routinely sells many thousands of scratch-off cards for which there is not merely a slight chance of winning, but rather zero chance. Nil, nada, zippo--as in they already sold and redeemed the winning tickets and there ain't none left.
Hoover has filed a claim notifying the lottery that he plans to sue their collective rears for engaging in a massive fraud against the poor schlubs who buy tickets believing that they at least have some chance to win. As Hoover figures it, the state owes lottery players about $85 million in refunds. The lottery says everything's kosher and the professor should go away.
At first glance, I thought Professor Hoover was a hero of the people. Finally, an academic getting out of the ivy-covered tower to do some research on behalf of the little guy, right? It appeals to the populist in all of us. But as some of your comments on Tim Craig's news story point out, it's not quite so simple.
In fact, the state lottery has for years maintained a web page that notified lottery players when the top prizes in each game have been won, rendering that game rather pointless. Even if Hoover is right that the state has failed to live up to the letter of its own policy, which calls for removing such dead cards from retail outlets as soon as the winning tickets have been redeemed, the fact is that the lottery puts the correct info out there. And there's no evidence that the lottery is intentionally trying to keep games on the market after winners have already emerged.
To the contrary, the state does move to close down games in which the top prizes have been distributed--just not fast enough for the professor's taste. (It's admittedly a bit far-fetched to expect that your average scratch-off card buyer--an impulse buy if there ever were one--to first check in on the lottery's web page to see which games still have the most prizes extant.)
And there is the basic fact that since it is so well documented that lotteries are regressive and offer lousy odds, buyers ought to know better.
So while Professor Hoover is likely delighted to have had his few days of fame--watch for enrollment in his courses to spike next semester--I can't say I'd be too thrilled to have a large pile of tax dollars go his way in damages should he win his case against Virginia's lottery. The professor has made his point and given lottery players fair warning. Now it's time for him to go back to teaching Investments.
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