The natural life history of a lottery: the importance of large wins in the establishment and survival of a lottery

Abstract

Historically, governments have often used lotteries as an alternative form of revenue generation. In this paper, we examine the life history of the Canadian Lotto 649 by examining sales figures from the lifespan of this popular lottery product. The examination of the early days of the lottery revealed the importance of large jackpots in establishing the lottery. Over time, competition and small jackpots were associated with a drop in ticket sales. An increase in the price of the tickets in 2004 resulted in a decrease in the number of tickets actually sold, an increase in the size of the jackpot and an increase in revenue. The results of this study highlight the importance of large jackpots in establishing, maintaining, and revitalising this lottery product.

Keywords:

• lotteries
• betting
• history
• government
• gambling industry

Acknowledgements

Support to the Centre for Addiction and Mental Health (CAMH) for salary of scientists and infrastructure has been provided by the Ontario Ministry of Health and Long Term Care (OMHLTC).

Notes

1. All dollar figures are given are Canadian dollars. From 1990 to 2009 the Canadian dollar has varied from US$0.61 to US$1.01. The current (September 2009) value is US$0.92 according to http://www.bankofcanada.ca/en/rates/exchange.html, retrieved 28 September 2009.

2. In time series analysis (see McCleary & Hay, 1980) a value at time T is often dependent on the value at time T–1. For example, the unemployment rate in June is dependent on the unemployment rate in May and April because some of the same people unemployed in May and April are still unemployed in June. There may also be seasonal dependencies with lower unemployment in the summer compared to winter, because of seasonal work such as landscaping and construction. If this autocorrelation is not controlled for, the resulting correlation would be inflated. In the current study, the size of the grand prize is partially dependent on the size of the prize the previous week because the prize money that is not won is rolled into the next prize. The lag 1 autocorrelation of the grand prize value was r = 0.49, p < 0.001. If the autocorrelation is not dealt with, the resulting analysis can be distorted. Autocorrelations are often dealt with by differencing which means to subtract from each data point, the value of the previous observation.