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When I read this kind of stories about US lotteries (and there seem to be several of this kind of stories going around), I always wonder how on earth it is possible for so many cases of failed lottery rule design to exist in the first place, and for those clear failures to persist for so long.

Did no one notice that the lottery always lost huge sums of money during the Rolldown draws, while it gained money on normal draws (as it should always be the case)? No one noticed that certain convenience stores suddenly sold hundreds of thousands worth of tickets in these draws, while most other stores sold a normal amount?

I think the irony is that from the organizer's point of view, it's essentially working as intended. The "windfall" mechanic was supposed to make rollovers more enticing by increasing the payout amounts for everyone. The only reason to make a lottery more enticing is to sell more tickets.

So they sold more tickets, and made more payouts on lesser tickets. Exactly as they planned. The lottery doesn't actually lose out - it's just emptying the pot (which was filled in previous games) in return for increased sales.

It's the old adage "the house never loses" - if 50% goes in the pot and 50% goes in their pockets, it doesn't matter who wins the pot - their 50% doesn't change. If a mechanic creates an incentive for more sales, their take increases. Fantastic. But if popular perception becomes that the game is rigged, less people buy tickets - and their take decreases.

(We had an office draw that'd run for months at a time, until someone eventually won. But we wouldn't take new players until the pot had been emptied, as someone joining for the last 2 rounds and winning everything, lost us more players than we gained. That is essentially the long-term risk here too. 10 people paying in until one of them wins, feels fair. 10 people paying in until the 11th wins, doesn't. And when the game stops feeling fair, you start to lose the feeders that fill the pot in the first place.)

I don't understand why this is an issue since each drawing's odds are independent. Perhaps I don't understand how these pools work.

That's the disconnect. Each draw's odds are independent, but each draw's winnings aren't.

So there's a collectivism that goes into a growing pot. This is the only thing that really makes a "rollover" enticing to players. If each draw was an isolated incident, the "windfall" mechanic the article describes would be in place for every draw. So a collective pitches in, and the pot is distributed amongst the collective's members (the players) according to how successful each ticket is. So if there's no 6-number winners, there's more left in the pot for the 5-number winners. If there's 5-number winners, there's more left in the pot for the 4-number winners, etc.

(Either that, or the house makes out like bandits. State lotteries are usually regulated to keep a distinction between the pot and the profit, hence such pot-emptying mechanisms.)

But if the pot rolls over - it's not distributed, but added to the pot for the next draw - you now have more than one collective. One collective that's contributed to the pot (over n draws), and one collective that participates in the winning game (over 1 draw). And if there's a significant disconnect between the two, then yes - as one commenter put it, sour grapes. It's the difference between feeling like you've lost a fair game, and feeling like you've been hustled.

Technically it makes zero difference. But if it makes people less inclined to play in future, then it's bad for the long-term health of the game.

It becomes an issue because you introduce humans and human emotion into something that is only viable because of the emotional draw that gets people to play. That emotion feels betrayed... feels so the actual facts aren't relevant... then they don't keep playing and the game dries up.

It's an issue because of "sour grapes". The people that had been in the game longer feel the newcomers didn't deserve to win. Feeling that way led them to no longer play - and that is the issue. Fewer players = smaller pot = fewer players = smaller port = fewer player.... you get the idea.

>Did no one notice that the lottery always lost huge sums of money during the Rolldown draws, while it gained money on normal draws (as it should always be the case)?

The state never "loses." In this case, for example, the MIT group "17 and $18 million ... over a seven-year period, earning at least $3.5 million in profits," yet the state made $120 million. Even if the state noticed, why would they care? Pay out $3.5 million to make $120 million? Why not. The problem is that it :"sounds" rigged.

>No one noticed that certain convenience stores suddenly sold hundreds of thousands worth of tickets in these draws, while most other stores sold a normal amount?

Someone noticed, because they tipped off the Boston Globe that "in certain Massachussetts locations, Cash Winfall tickets were being sold at an extraordinary volume." Again, it "sounds" rigged.

The average person is not going to think that a lottery has a "loophole" in it. The average person thinks something like that can't happen.

The lottery’s and retailers’ profits are each a fixed amount of the ticket price, and the rest goes into the prize pool. They don’t lose any money unless they commit to paying more prize money than they allocated to the pool. Jackpots are explicitly a (large) fraction of the unallocated award funds and so cannot make the lottery operation insolvent— only an excess of fixed-value awards can do that. In fact, the increased sales on rolldown draws just mean more profit for the operators and reduce their biggest risk, which is something happening to the stored funds used to pay out prizes.

Long before that point, lotteries that decide to innovate in game design don't have a professional actuary on the staff to run the ruler over the designs?

That's the weird part for me. Surely inventing a whole new game mechanic, must be their industry's version of rolling your own encryption?

Well, that also seems like something state governments would do.

I suspect the designers were aware of this shortcoming, but were not concerned. As explained by others in this thread, the state still made money.

The house always wins, the lottery didn't lose money during the rolldown, nor any other time. Quite the opposite.

They also did notice.


>And, there was also the fact that lottery officials in Massachusetts had started to figure out that the Selbees and the MIT students had identified an advantage, but had done very little to combat it.

>"How do I become a member of the [Selbees'] club when I retire?" one lottery official joked in an email that later became public.

These lotteries are usually run by state commissions, staffed by career bureaucrats and sometimes led by appointees. I don't think there's a deep well of talent that is familiar with how to implement robust monitoring, security, and optimization systems.

Lotteries are run by a couple of companies, and the multi-state systems are run by fairly secretive organizations that have their share of issues.

End of the day, the providers don’t have much interest in finding problems, and the states have limited ability to detect them. Protecting the integrity of the system can be largely addressed with PR.

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