Learning from Prize Payouts

C hapter 4 Learning from Prize Payouts 4.1 The Parim utuel Payout System Now th a t you know ab o u t the ra th e r unfavorable odds of w in­ n ing a t lo tto , you m ay w onder w here all the m oney invested in lo tte ry ticke ts goes. A com m on featu re of all lo tteries is th a t only a ce rta in percen tage —usually, betw een 45% and 55%— of th e draw (ticket) sales is allocated to th e prize fund. T h e rest o f th e draw sales is d iv ided am ong a num ber of supposed ly good causes: to the governm ent in lo tte ry du ties ( “painless tax es” ), to th e re ta ile rs in com m issions, and tow ard o p era tin g costs for th e lo tte ry co rpo rations (see C h ap te r 1). T his in fo rm ation m ay or m ay n o t be im p o rtan t to ind iv idual players. How th e prizes are ca lcu la ted , however, should be very im p o rtan t to all players.