The goal of this thesis to analyze profitability of major lotteries. Lotteries typically return only 50% of the collected money to the players and thus it is unusual to expect that any of the lotteries can be profitable in the first place. However, the lottery jackpot is not distributed uniformly in the individual draws. This gives at least a theoretical opportunity to make an expected profit when the jackpot reaches substantial values. The US lotteries do not impose any jackpot cap and historically the jackpots reached astronomical values (the largest jackpot reached $1.586 billion for Powerball lottery and $656 million for Mega Millions lottery) and thus the payout of the lottery could have been larger than the money collected in a given draw. European lotteries impose jackpot cap and thus one cannot win more than 190 million Euro in Euromillions lottery and more than 90 million Euro in Eurojackpot lottery. The focus of the thesis is to compute the value of a randomly chosen ticket and the value of a syndicate ticket (filing all possible combinations) and compare it with the actual ticket cost. The values of tickets are functions of how many other numbers are filed due to the effect of jackpot sharing and thus one needs to develop a model of how many tickets are expected to be filed as a function of the current jackpot size. The effect of jackpot sharing should be modeled using the Poisson distribution.
Seznam odborné literatury
Vecer, J. (2013): Can Euromillions Lottery Be Profitable?, http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2237429.
- zadáno a potvrzeno stud. odd.