Lotto—how to get in and how to win

A close look at a strategy from the book entitled “State Lotteries – How to get in and how to win” is described and discussed.

Individual Preference for Longshots

Results from studies on risk taking behavior suggest that people tend to be risk seeking when making choices over lotteries that involve longshots: small probabilities of winning sizable payoffs. To investigate preferences over longshots systematically, we conduct an incentivized experiment using state lotteries in China, each involving a single prize and fixed winning odds. This enables our construction of single-prize lotteries involving winning odds between 10-5 and 10-1 and winning prizes ranging from RMB10 (about USD1.60) to RMB10,000,000 (about USD1.60 million) across different expected payoffs. For lotteries with expected payoffs of 1 and 10, subjects exhibit heterogeneous preferences for longshots: some prefer the smallest winning probability whereas others favor intermediate winning probabilities. As the expected payoff increases to 100, subjects become predominantly risk averse, even for the lowest winning probability of 10-5. Our findings pose challenges for utility models of decision making under risk.

Social media in state lotteries: Exploring the role of technology in program marketing

State-sponsored lotteries are adopted to raise funds for state programs. As such, there is a public mission within these organizations; however, most operate like private companies, thus shifting the organizational ethos to profit maximization. Much research on social media focuses on federal and local government agencies. In this paper, we explore the role of social media in lottery program marketing. Through an analysis of random lotteries on Facebook, Twitter, YouTube, and Instagram, we find: 1) a focus on aspirational marketing to promote the lottery as a business entity through its products and 2) increased dialogue with followers (i.e. customers) compared to other public agencies. This is a shift in how public organizations traditionally use the social tools, showing there can be a balance between marketing and dialogue.