ABSTRACT
In many countries participation in lotteries is extremely popular and less tainted than playing in casinos. This popularity is somewhat paradoxical when it is considered that in roulette-type games more than 95% of the amount bet is returned to the players, whereas in lotteries this proportion is usually below 50%. The Dutch State Lottery returns 35 million guilders out of a monthly revenue of 50 million. Thus the expected value is -30% of the bet. The Dutch Giro Lottery returns 3 million guilders out of a revenue of 12 million, thus offering an expected value of -75%. Compared to the expected loss of 2. 7% in French Roulette, and 0.5% for Basic players in blackjack, the losses incurred in lotteries are huge. However the two major Dutch lotteries still attract 2 million and 1.2 million players monthly. Not only is this general attractiveness of lotteries miraculous, one should also wonder why the Giro Lottery, with its much larger expected loss can, so easily, compete with the State Lottery. Or conversely, why the State Lottery continues to return 70% of its revenue, when obviously a return of 25% would be sufficient to attract the players. Apparently this is a market for which the market mechanism does not work at all.
