by Anthony Kelzenberg for agameofskill.com
Playing the Odds?
This past week Powerball, the leading national lottery, made two changes to its program intended to produce larger, and more frequent, carryovers for its twice-weekly drawings. First off, it DOUBLED the price of the wager from one dollar per combination to two dollars per combination. To mitigate some of this increase in cost, the number of possible “Powerballs” in the sequence was cut from 39 to 35, meaning the odds of hitting the Powerball lottery on a single ticket went from 195 million to 1 to “only” 175 million to 1. Here are the odds quoted for other activities seen in everyday life (source, Funny2.com).
Fatally slipping in bath or shower: 2,232 to 1
Injury from mowing the lawn: 3,623 to 1
Injury from using a chain saw: 4,464 to 1
Getting a hole in one: 5,000 to 1
Bowling a “300” game: 11,500 to 1
Being murdered: 18,000 to 1
Injury from fireworks: 19,556 to 1
Odds of dating a supermodel: 88,000 to 1
Being struck by lightning: 576,000 to 1
Winning an Olympic medal: 662,000 to 1
Drowning in a bathtub: 685,000 to 1
Being killed by lightning: 2,320,000 to 1
Being an astronaut: 13,200,000 to 1
Getting canonized (made a saint in the Catholic Church): 20,000,000 to 1
Killed on a 5-mile bus trip: 500,000,000 to 1
Looking at the above statistics, the ONLY activity more rare than hitting the Powerball lottery is dying while taking a very, very, short bus trip. In fact, it is roughly 300 times more likely to be struck by lightning than it is to win the Powerball lottery. I think it can be asserted that winning a large-payoff lottery is very difficult. But what can we say about value of betting the lottery? If it a “fair” wager?
Takeout and Cost of Entry
The “takeout” is the percentage of a wager pool that is removed before the remaining pool is distributed to the successful winners. Ideally, a horseplayer should focus on pools having LOWER takeout, because more money is returned to successful bettors. There are some wagers (Pick 5 or Pick 6 wagers, Super Hi5) where money is “carried over” because no one held a winning combination the previous day. Sometimes these carryovers can make a pool with ZERO or NEGATIVE takeout if the carryover is large enough to compensate for the mandated takeout of the wager.
In the lottery (not just Powerball but all lotteries), the takeout is an abhorrent 50%. In other words, 50 cents of every dollar spent on lotteries is taken from the players. In pari-mutuel horse racing, where the bettors AS A GROUP set the payoffs, takeout varies, but typically it is 15% for win/place/show (“the straight pools”), 20% for exactas and daily doubles, and 25% for trifecta, superfecta, Pick 4s, Pick 5s, and Pick 6s (the “superexotics”). The horseplayer, in addition to considering takeout and possible returns (the superexotics are generally the most difficult wagers to win, but have the best payoffs), should consider his or her EXPERIENCE and APTITUDES. A losing wager is essentially a 100% takeout to the player. When possible, horseplayers should stick with race tracks, types of races and track surfaces that produce success. For example, if one isn’t good at evaluating unraced two year old maidens, pass those types of races until you feel you have a strong angle.
One more point to make on the superexotics – it is very common today for a superexotic combination to be purchased for 50 cents or less. This gives the player the ability to “swing for the fences” by including more long shots on a budget, and I think this should be embraced by all players, even those not prone to stray from the straight pools or new players. The reason is LEVERAGE. Every added horse in a superexotic combination roughly ups they payoff by 5 to 10 times. In past years even a $1 per combination cost could be prohibitive, but at 50 cents pretty much every fan has the potential to play a viable, yet modest trifecta or superfecta ticket for a total cost of $3 to $12, depending on ticket construction. Also, this lower “cost of entry” is a possible alternative to lottery players that are seeing their costs to play not decrease, but indeed DOUBLE or TRIPLE (many daily lottery and scratchoff games are also increasing in cost).
As an experienced player, it’s amazing to me how little people in the “real world” understand how superexotic wagering functions at the race track and how it is possible to win a lot (maybe $1,000 to $2,000) without betting a lot (less than $20). I would challenge the “powers that be” at the NTRA and the tracks to do a better job of educating not just regular, or semi-regular players, but the general public, that (1) As an industry we are making our games less expensive and easier to play, (2) Our games offer value not only to the professional player but to the novice as a game of chance and skill, and (3) We would dedicate a small percentage of national superexotic wagering to support equine health research, equine retirements and/or breakdown prevention. There is a proven model for this approach – the pari-mutuel horse racing hub for Hong Kong, which handles more money than any other tote system in the world. Most of the takeout in Hong Kong is used for local government-sanctioned projects and charities.
I have presented a case that the lottery is a terrible wager. The odds of winning a super lottery like Powerball are incredibly against the player, and the takeout is outrageously high, even in the daily wagers. Consequently, the lottery is one of the worst bets in the marketplace. Pari-mutuel horse racing, with its much lower takeouts, lower wagering costs and multiple wagering opportunities, is a much better system, not only for experienced players, but semi-regulars and novices to get involved at some level.
I challenge the NTRA and other industry leaders to recognize the positive aspects of modern-day pari-mutuel wagering and its potential not only to support our game, but support charities that as an industry we should get behind.
Anthony Kelzenberg has been a “Weekend Warrior,” since Alysheba won the Kentucky Derby in 1986. His favorite horses are Sunday Silence (old school) and the current Australian undefeated super mare Black Caviar. He is an occasional blogger at “The Flat Bet Prophet,” has lead several successful superexotic wagering syndicates and likes to think he has a good eye for a race horse. He has been a featured guest on Derek Simon’s Twinspires.com radio show and can be contacted through Facebook.