Yahoo Finance “Investing” in the Lottery? The Math behind Toto and 4D in Singapore
Big Sweep, 4D, Toto…so many ways to win. And on top of that, a ticket is just a few dollars. Even if you have a snowball’s chance in a microwave, that small investment is worth the potential payoff right? Besides, there are systems you can use to improve your odds. There are whole books about it. In this article, I talk to some serious lottery players. Then I examine the numbers behind it.
Winning Punters
I found some punters who claim to have won it big in the lottery. Coincidentally, one of them I meet every morning:
Ellice (pronounced ‘Alice’) Kwong is a housewife, with two children in JC. I run into her at the MRT station every morning, where she invariably comments on my having five of the same shirt. She tells me that:
“I not sure how much I spend also. You ask me also I don’t remember. Maybe $60 one month. $20 for 4D, $40 for Toto. I think should be more than most people spend. But you know I got win so many times! Four times already. If my luck is good just play lah.”
Dominic Wang is another serious punter. He’s a former house mover, who now deals in light fixtures. He says:
“I spend around $50, maybe more. I think with the right system, it’s quite possible to win. I’ve won twice myself, once I won over $3000. I think as long as you know what you are doing, you don’t go and randomly tikam-tikam*, the odds are not as bad as most people think.”
*Tikam-tikam – Roadside gambling game, very popular in the ’60s. The irony is noted.
Not-so-Lucky Punters
But most of the lottery lovers I spoke too have an entirely different experience:
Jerome Quok is a Mass Communications student, who moonlights as a short order cook. He tells me he spends:
“At most $10 a month. Maybe less. I don’t really go with the mindset that I will win. It’s just for the excitement when I check the results. It’s more like entertainment than an actual investment. I only ever won once, and it was something pathetic. Less than $100.”
I said “it’s still money,” but Jerome said the win was after playing regularly for four or five years.
Aaron Siew is one of those friends I love to hate. He’s does typesetting for brochures and magazines. While he comes over to steal borrow more DVDs, I ask about his Toto obsession:
“I guess I spend about $20 a month. I promised that I will win Toto at least once in my life. It’s a ‘must do before I die’ thing. I don’t care even if it’s consolation prize, so long as I win at least once in my life. I’ve never won ANY lucky draw or anything before.”
I asked if that wasn’t a good reason not to buy Toto. But he suggested I dip my head in a bucket three times and pull it out twice, then he left.
I asked Jenna McCormick, who lives two floors below me. She’s a housewife, with one child in Primary school.
“I think Louisa (her mother-in-law) has a bad influence on me. When she buys, I’ll buy. That’s about $20 a month, but some months I don’t buy at all. I don’t really understand the different systems, she (Louisa) will tell me how to colour the slots in. I won once, it was a few hundred dollars. So I split it with her and we had a big party at Pizza Hut, and my share was all gone after that!”
Investment vs. Payoff
Of the 12 people I spoke to, only one has actually seen a return on his investment. Here is a cost / benefit comparison:
Claimed Investment(Refers to total investment over five years) | Claimed Payoff(Refers to total winnings over five year years) | Profit / Loss | |
Dominic Wang | $3000 | $4500 | (+) $1500 |
Ellice Kwong | $3600 | $2,500 | (-) $1100 |
Jenna McCormick | $1,200 | $500. After splitting with fellow punter, $250 | (-) $950 |
Jerome Quok | $600 | $60 | (-) $540 |
Aaron Siew | $1,200 | $0 (ha ha!) | (-) $1200 |
To put it in perspective, think about the last investment scheme you saw. How would you react if someone showed you a scheme where, after five years, your reward would be somewhere between $1500 and negative $1200?
If you reckon it’s a great deal, drop me an e-mail. I’ve got a special investment scheme you’ll love.
Toto | 4D | Singapore Sweep | |
1st Prize (Or Group 1 for Toto) | 1 in 8,145,060 | 1 in 10,000 | 1 in 3,200,000 |
2nd Prize (Or Group 2 for Toto) | 1 in 1,357,510 | 1 in 10,000 | 1 in 3,200,000 |
3rd Prize (Or Group 3 for Toto) | 1 in 35,724 | 1 in 10,000 | 1 in 3,200,000 |
Just for the sake of reference, the odds of getting a Royal Flush in Poker, on the first 5 cards, is around 650,000 to 1. So with the exception of 4D, you might be better off just playing Poker. Or betting on the PGA tour. The odds of a pro-golfer getting a hole-in-one are 5000 to 1, around seven times more likely than winning Group 3 Toto.
Pros and Cons
These are the upsides of investing in the lottery:
Ad-Hoc Payments – If you don’t have enough, just don’t play that month. This means you need less planning and discipline than if you used a regular investment scheme.
Affordability – Assuming you don’t get obsessed, you won’t feel the pinch of the lottery. The amount spent is small, unlike the monthly payments on an investment scheme.
Easy – No forms to sign, or documents to produce. Just buy a ticket, that’s it.
Fun – Some people use the lottery as a way to relieve stress or tension.
And the downsides:
So there you have it: the only check you’re going to get is a reality check. Highly improbable wins, with a worse Return on Investment than any financial plan on Earth. Which leaves one to wonder: would people actually invest more in banks if the advisers just threw up their arms and said: “Who knows? Just give us the money and we’ll randomly pay it out!”
Image Credits:
Gemini Geek, Lydia Snyder, Zento Fitness, Universe Today
Do you have better or worse odds? Tell us in the comments!
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