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Secrets of State Lottery Scratch-off Contracts

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When most people think of advantage gambling, state lottery scratch-offs are the last thing that enters their minds.

Everyone’s heard of counting cards at blackjack. There are even several moviesabout it.

And poker has been shown to be a game of skill; just look at the repeat winners of major tournaments like the World Series of Poker and the World Poker Tour.

But most people still refer to the lottery as an “idiot tax”.

And scratch offs have a notoriously bad expected value (which you can think of as a gambling game’s return on investment).

To give you an example of how bad lottery tickets can be, most $1 scratch offs have an expected value of around 60%, meaning for every $1 you spend, you’re expected to get back just $0.60; a $0.40 loss.

Most penny slots have paybacks that are better than that.

And other gambling games, like blackjack, can approach 99% payback without any card counting at all.

I’m here to shed light on a new way of thinking about scratch-offs and show you how you can improve your odds. It won’t always be profitable.

But under the right circumstances, it can be. If you’re going to play regardless, you might as well maximize your chances of winning.

Here are my insights about how to win at scratch-offs. I’ve gained these insights by reading the contracts and procurement documents that state lottery organizations have with their ticket printers.

Combine these insights with sites that calculate a scratch-off ticket’s odds, and you’ll be playing like a sharp

Where Are Scratch-off Grand Prizes?

Grand prizes are not random.

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I’m sure all of these insights will come as a surprise.

But this one is probably the biggest.

Surely the state wants to ensure a fair game.

How can it be fair if the biggest prizes of all aren’t even random?

Here’s an image of the procurement document that the Massachusett’s lottery used to elicit bids from ticket printers:

You’ll see that they require the grand prizes to be distributed evenly throughout the game.

Note that “distributed evenly throughout the game” is not random.

If the prizes were random, then they might all appear at the start of the game. Or they might all appear at the end of a game.

But the state doesn’t want that to happen. If all of the grand prizes were claimed at the start of the game, then people would stop playing the game because they would have no shot at the big money.

You can take advantage of this fact by figuring out how many tickets are in a “pool” where a grand prize should be. If there are 9,000,000 tickets and 3 grand prizes, then divide 9,000,000 by 3 to figure out that there must be 1 grand prize every 3,000,000 tickets.

Then, use the state’s lottery website to figure out how many tickets remain. Most states publish this information for each game.

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In the example game just mentioned, if there were 7,000,000 tickets remaining and still 3 remaining grand prizes, then you know the first grand prize must be in the next 1,000,000 tickets. Your odds just improved from 1 in 3,000,000 to 1 in 1,000,000.

That may not seem like much, but it can mean the difference between negative and positive expected value.

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Is There A Limit To The Number Of Big Winning Tickets In A Roll?

Here’s an image from documents filed as part of a Texas lawsuit against the state and the ticket printer:

In this contract that Texas has with IGT, there’s a clause that states that there can be no more than a certain number of $25-$50 winners per pack of tickets. There’s another clause that states there can be no more than one winner of $75 and higher per pack. (The “one” is redacted, but we can deduce that tit’s one by looking at the word following the redaction, which is “winner” rather than “winners”).

How can you use this to your advantage?

Buy only one ticket from a pack at a time and scratch it right there at the store.

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If it happens to be a big winner, don’t buy any more tickets from that pack.

What Is The Minimum Payback for a Roll of Scratch-off Tickets?

This next image is from the request for a proposal from the New Mexico lottery association to ticket printers:

It shows that each pack of tickets has some guaranteed payout. The details of the guaranteed payout aren’t specified, but from other contracts and personal experience, I’ve found it to typically be about 50% of the price of a pack of tickets. If an entire roll of tickets costs $600, then the GLEP is usually about $300.

What this means for the advantage player is that you should not stop buying after a string of losers.

Since each roll of tickets is guaranteed to have a certain minimum payout, then every loser you see increases the chance that the remaining tickets are winners.

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Conclusion

While none of the above insights will guarantee you will win, they are just a few of the things you can do for yourself if you want to know how to beat scratch-offs.

Combine these insights with some expected value calculations from the remaining prizes that get displayed on the state lottery websites and you’ll be doing way better than the average lotto player.

Good luck.

About the Author

Eric Ihli, a professional gambler/programmer, spent 10 years as a full-time professional gambler and 5 years as a software engineer. He now combines those two passions by writing software to discover and evaluate profitable gambling opportunities.