Who counts the losers?

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I’ve said it before, but I need to say it again. The UK lottery annoys me. Intensely.

It’s not just the UK lottery. Every lottery in the world has the same problems.

Right now the newspapers and news websites are full of the two lucky winners who have shared a record £66 million jackpot. We have endless stories about how this will change their lives. We hear stories about previous winners. It’s all champagne, Rolls Royces, islands in the Caribbean and telling the boss where to shove that job.

But that’s not the whole story, is it? What about all the people who lost at the lottery this Saturday? Why don’t we hear about them? How many people lose the lottery?

It turns out that it’s not so easy to find out about the lottery losers. For some reason, Camelot don’t want to tell you. Or if they do they have buried it so deeply that my friend Mr Google couldn’t find it.

So I had to do a spot of sleuthing. Pull on your deerstalker hat, light a pipe or two and follow me. We’re on the hunt for losers.

I spotted this on the Camelot website:

Operated by Camelot, The National Lottery is one of the UK’s leading consumer brands – around 70% of UK adults play nowadays, over six million people win prizes every week and annual sales are over £7.2 billion.

We offer a wide range of regularly-refreshed draw-based and instant play games – and a truly integrated multi-channel experience, with players able to buy tickets in-store, online or on their mobile devices.

In the last 20 years, The National Lottery has created over 4,000 millionaires and generated more than £34 billion for National Lottery Good Causes – that’s over £34 million, on average, raised each and every week.

On the face of it, this all sounds like great news. We have six million people winning prizes every week. £34 million for good causes every week. £34 billion for good causes since the lottery started. Elsewhere on their website they say that they have made 4,000 new millionaires.

Be still, my beating heart. It all sounds too good to be true. Everyone’s a winner. It is unremitting wall to wall good news.

We need to dig a little deeper. The game’s afoot, Watson. Did you bring your revolver?

We know that the Government has set out how the lottery money is divided up. All of the money we spend on lottery tickets is split into these proportions:

Prize fund 50%
Good causes 28%
Government duty 12%
Retailer commission 5%
Camelot operating costs 4.5%
Camelot profit 0.5%

 

If we know one of these figures, we can work the rest out. Helpfully, Camelot has told us that in an average week the lottery will generate £34 million for good causes.

That means that an average week looks very roughly like this:

Prize fund £60.7 million
Good causes £34.0 million
Government duty £14.6 million
Retailer commission £6.1 million
Camelot operating costs £5.5 million
Camelot profit £0.6 million
Total £121.4 million
 

Over the 20 years that the lottery has been running, Camelot say that they have given £34 billion to good causes. We can feed that into the table too … gosh, isn’t this exciting?

Since the lottery started 20 years ago, this is how much the public have put into it:

Prize fund £60.7 billion  
Good causes £34.0 billion  
Government duty £14.6 billion  
Retailer commission £6.1 billion  
Camelot operating costs £5.5 billion  
Camelot profit £607 million  
Total £121.4 billion  

Of course, these figures won’t be 100% accurate. It’s an extrapolation from the few figures that Camelot like to admit to. But it gives us some rough figures to play with. It should be good enough.

Until recently, lottery tickets cost £1 each. So this means that there have been roughly 121 billion lottery tickets sold creating just 4,000 millionaires.

Under the old lottery rules, the odds of winning anything were roughly 54 to 1. That means that of the 121 billion lottery tickets that were sold, only 2.2 billion were winning lottery tickets. That means that the British public have spent £119 billion on losing lottery tickets.

It gets worse. Most of the winners would have won a small prize for matching 3 or 4 numbers – typically £25 for three numbers and £100 for four. Statistically, these wins would be quickly wiped out by all the losses. In order to “win” the lottery in any meaningful way you need to get one of the big prizes – either all six numbers or five plus the bonus number.

Under the old rules, the odds of getting all six numbers was 1 in 14 million. So we would expect 8,500 jackpot winners. Some of them would have had to share their jackpot and some would have won less than £1 million, so Camelot’s claim of creating 4,000 millionaires seems about right.

Getting five numbers plus the bonus ball used to win around £50,000. We can safely call that a life changing amount, so let’s add that into the pot. The odds are 1 in 2.2 million, so we can expect our 120 billion tickets to generate around 51,500 five ball plus bonus winners.

Add it all up and we get these sobering numbers. Of the 120 billion lottery tickets sold, only 60,000 have won a serious amount of money of £50,000 or more.

In other words, if you play the lottery for a long time you may get the occasional small win, but these small wins will be dwarfed by the far more frequent losses.

If my crude back of the envelope maths is right, 99.99995% of lottery tickets are either losing or don’t win enough money to outweigh all the losing tickets that you are going to buy in your life.

You might say that none of this matters. A lottery ticket is a chance to dream. Well, yes and no. What we have done over the 20 year life of the lottery is to persuade the public to hand over £120 billion of their hard earned cash.

£48.6 billion of this has gone back to the Government, either as duty or to pay for the “good causes” that the Government probably ought to have funded from general taxation.

More than £12 billion has disappeared in the costs of running the lottery including £600 million profit for Camelot. And of the 120 billion tickets sold, we have only made 4,000 millionaires and given 51,500 people more than £50,000.

Camelot changed the rules a little while ago to make it harder to win the jackpot. Instead of odds of one in 14 million, the odds are now one in 45 million.

That’s a huge number, so let’s try to make it real. The population of Spain is 45 million. Imagine trying to find a particular person in the whole of Spain simply by knocking on doors at random. If you find the person you are looking for on the first attempt, that’s the same probability as winning the jackpot in the UK lottery.

So sure Camelot will make a lot of fuss about the two winners this week. The tabloid newspapers would love to get hold of them, so they can run human-interest stories about how their lives will be changed.

And I can’t help thinking that the whole thing should be scrapped. Either that or we should educate the public into realising what an awful deal they are getting from the lottery.

 

 

 

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3 thoughts on “Who counts the losers?

  1. Yup. Most people could’ve paid for a nice little vacation out of their lottery purchase money. And they aren’t going to win anything. And SOMEONE is getting rich (the lottery people, not the winners) because their part is guaranteed.

    Husband is buying a few tickets here – I hope he wins. He is a statistician – and knows the odds. The prize is just too big. He doesn’t even have a plan for the money! I told him if he wins, he had better not turn into one of those losers who wastes it all.

    If he wins – we’re in gravy, but I will STILL finish Book2 and Book 3; maybe in a cleaner house.

    If you’ve bought a ticket, good luck.

    If you haven’t, at least you still have your money.

    And you got a blog post out of it.

    Win/win/win.

    Like

    • It would be great if there was a win/win with the lottery. I’m afraid the only winners I can see in this are Camelot and the extremely tiny proportion of jackpot winners.

      The odds of sharing in the jackpot are still 45 million to 1. It doesn’t really matter how big the prize is, those odds are ridiculously long.

      Mind you, that gives me an idea for another blog…

      Liked by 1 person

      • The sad part is how often the winners are back where they started quite soon – or worse. That’s a lot of money that gets blown through. BECAUSE people capable of managing money are not usually playing the lottery. CAUSATION, not correlation in that case.

        Like

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