Hi! I’m Trevor Ford (proof), founding team member at Yotta, a company that pays out cash prizes on savings via a lottery-like system (based on a concept called prize-linked savings).

I used to be a regular lottery player, buying tickets weekly, sometimes daily. Scratch tickets were my vice, I loved the instant gratification of winning.

I heard a Freakonomics podcast “Is America Ready for a “No-Lose Lottery”? And was immediately shocked that I had never heard of the concept of prize-linked savings accounts despite being popular in countries across the globe. It sounded too good to be true but also very financially responsible.

I’ve been studying lotteries like Powerball, Mega Millions, and scratch-off tickets for the past several years and was so appalled by what I learned I decided to help start a company to crush the lottery and decided using prize-linked savings accounts were the way to do it.

I’ve studied countless data sets and spoken firsthand with people inside the lottery industry, from the marketers who create advertising to the government officials who lobby for its existence, to the convenience store owners who sell lottery tickets, to consumers standing in line buying tickets.

There are some wild lottery stats out there. In 2021, Americans spent $105 billion on lottery tickets. That is more than the total spending on music, books, sports teams, movies, and video games, combined! 40% of Americans can’t come up with $400 for an emergency while the average household spends over $640 every year on the lottery, and you’re more likely to be crushed by a meteorite than win the Powerball jackpot.

Ask me anything about lottery odds, lottery psychology, the business of the lottery, how it all works behind the scenes, and why the lottery is so destructive to society.

Comments: 587 • Responses: 69  • Date: 

Raliator112 karma

What are the actual odds of winning various lotteries?

trevintexas60 karma

The state lotteries generally pay you out less than 50 cents on every dollar that you put in ... the odds are terrible. The worst EV of all the gambles you can do pretty much.

OzmosisJones65 karma

Wait, are you saying the prize payout percentages are less than 50%?

trevintexas11 karma

Yes exactly

OzmosisJones62 karma

What ‘additional math’ are you doing to get those numbers? State lotto prize payout percents are public information, and the median is nowhere near below 50%.

trevintexas9 karma

I'm talking about the PowerBall and MegaMillions primarily, which have worse odds than other games. You also have to factor in taxes

OzmosisJones45 karma

Just glossing over the fact that isn’t what you implied above… why factor in taxes? Does Yotto include the how much a player will lose to taxes in their prize payout percents?

Or is that math you only do on state lotteries to make their numbers look worse compared to yours?

trevintexas29 karma

Never commented on our returns versus the state lotteries. Just answered a question about the odds of the state lotteries. If you ask me a question, I'll answer it directly.

Why factor in taxes? Because you're using post-tax dollars to buy the ticket so it makes no sense to not use post-tax dollars when calculating the return. I would advise anyone to do the same post-tax analysis everywhere for anything.

OzmosisJones-21 karma

So, yes or no, does Yotta include how much a player will lose in taxes in their prize payout percentages?

trevintexas5 karma

We include APY averages as a pre-tax percentage. Everyone has different tax rates. I'd encourage anyone to do the math on their post-tax returns for anything.

peetar103 karma

The average household spends 640$? Maybe because I'm upper-middle class, but I don't know anybody who regularly buys tickets (or at least admits/talks about it). What's the average spending in households that spend at least 1$ on tickets?

Lotto is run by state governments, and I believe a lot of the proceeds go to fund those governments. Isn't this better than gambling corporations making the profit? If we shut down all the lotteries, wouldn't people looking to get rich quick start throwing their money at for profit gambling businesses instead?

trevintexas15 karma

About 50% spend at least $1 once a year on tickets. So of households who play, it's actually around $1k per household.

Yes it's better than corporations but it's not better than not spending the money in the first place!

IndianaTheShepherd25 karma

A couple of questions from someone who never plays the lottery...

  1. What is a "No-lose lottery"?
  2. What is a "Prize-linked Savings account"?

My grandmother was addicted to gambling, whether that be Bingo night, Lotto, or Scratch-offs... It drove me crazy to see someone on a fixed income with zero savings wasting money on something with such horrible odds... Seemed so illogical. I understand that lotteries are beneficial to governments as a form of raising revenue, but it raises that revenue from the people who can least afford to pay it, rather than just taxing the wealthy...

trevintexas-7 karma

1) It's basically a type of lottery where even if you don't win, you didn't lose anything. Free to enter effectively

2) A PLS is an account where you earn tickets to win prizes just by saving money. You don't need to buy anything.

Very common in lots of other countries but new to the US

IndianaTheShepherd9 karma

  1. How does that even work? If you can enter for free, where does the prize money come from? Lotteries work because if 99.99999% of people lose, their money is what provides for the prize money as well as the additional revenue to support the State government/Schools/Shop that sold the ticket.
  2. Same as #1.

TheMF43 karma

It's not "free" it's just using your interest as payment instead of direct money.

trevintexas-23 karma

Yeah there's opportunity cost. But still free in the way society views free. Everything has opportunity cost. If you go for a walk in the park, it's free right? But you could have been working an hourly job for $x so no it's not free.

So yes, technically, you're right.

trevintexas12 karma

It comes from revenue generated from interest on the account balances

dkl41514 karma

How does the return on these accounts compare to interest rates on savings accounts?

trevintexas-10 karma

depends on your luck, you could win $500 one day, then $0 for a week, but on average we expect accounts to earn around 2.7%.

DaBi5cu1t10 karma

Why not make a thousand millionaires rather than one billionaire?

trevintexas-4 karma

It doesn't market as well in advertising.

SirWitsAlot6 karma

So we put money in your “savings account” so whoever does win you pay them with our money. But we think “our money” is still there. And if we ask for it, you just go and grab money from the next person abs give it to us.

If we literally never lose money and only gain. How do you make money?

I smell a Sam Bankman-Fried type scent here.

Maybe I’m wrong. But this is just weird. Very weird.

trevintexas3 karma

We make make money from interchange revenues and interest, similar to how banks make money. This is what funds the prizes.

Germanofthebored5 karma

OK, shouldn't it be Kilo millions (103 millions)? Mega Millions would be 106 millions, or a trillion. False advertising!

trevintexas0 karma

I think you have a solid lawsuit on your hands!

looney4174 karma

whos's really spending $$$$$ on the lotto???

my perception of my 400 friends on facebook would be maybe $20-100/person a year avg

trevintexas3 karma

Unfortunately some of the population who can least afford it are: "28 percent of Americans who earn less than $30,000 a year play the lottery at least once a week. They spend $412 a year on tickets." source: https://www.cbsnews.com/news/who-buys-lottery-tickets-those-who-can-least-afford-them/

gladias94 karma

which has the best odds.. picking my own numbers or having them automatically picked?

trevintexas9 karma

It's the same - purely random.

elpaco3134 karma

Are state lotteries just ways to tax the poor?

trevintexas1 karma

I'm not sure if they're by design ways to tax the poor, that would be a pretty cynical take.

That said, lotteries tend to be a regressive (and inefficient) tax, disproportionately impacting low-income people.

At the same time the lottery preys on people's hopes and dreams offering the false promise of a better life, which can be especially tempting for people who are struggling financially.

StrivetoSurvive3 karma

How can you say you are more likely to be crushed by a meteor than win Powerball when numerous people each year win Powerball, but I don't think anybody is crushed by a meteor. What numbers back up that claim?

trevintexas1 karma

really just the risk of a huge meteor wiping out everyone


lemmiwinksownz3 karma


trevintexas-3 karma

I don't know what you mean

nola_mike3 karma

Despite the odds, would it still be advantageous to buy one ticket?

trevintexas4 karma

Depends on your goal. If you want some entertainment, go for it. But you're going to lose most likely

nola_mike1 karma

But realistically, if I play one ticket whenever it's over $500 million for the off chance of winning, what could it hurt? Someone has to win it eventually, right?

trevintexas3 karma

Yeah, but odds and the math is reality. And you're likely to lose over 50% of whatever you put in.

nola_mike1 karma

I see what you're saying, but what is $2 for the extremely slim chance of winning $1.1billion? Not to mention the various other winning combinations that could happen on that same ticket. Walking away with even $1000 or whatever the secondary prizes are is more than enough to justify spending $2.

trevintexas8 karma

I agree. It's fine. Just know it's entertainment and not a good investment

Angilynne2 karma

Only one person has ever been struck by a meteorite and they weren’t crushed. But there are 1129 Powerball winners. Just saying… I’m guessing you already knew that, though? Since you’ve done so much research and all…

trevintexas1 karma

Most of the risk comes from the possibility of a large scale event wiping out tons of people.


OneForMany2 karma

We recently remodeled our garage and in the storage room there was a lot of junk. In that mess there was a pretty good size bag from a clothing store at the mall. Inside was filled with my dad's lotto tickets. The entire thing was filled with tickets. How much do you think it was worth in terms of money spent? I wanna say 1M.

trevintexas1 karma

Wow, he really saved all of his lottery tickets?! That's wild. I'm going to guess $126,354. Report back if you end up counting all of them :)

thecityandthecity2 karma

Lotteries seem often to be thought of as a benign form of gambling, with a slow rate of play, and lacking many of the mechanisms which casinos and online gambling use to encourage higher stakes and more frequent play. Is that fair? Or are there things lottery operators do which could move people into problem gambling?

trevintexas1 karma

I think that's a fair take, I also think it's oftentimes an intentional decision by lottery operators. Compare Powerball to a casino and Powerball looks way less destructive in comparison.

Lottery marketing has often pushed the narrative that lottery revenues provide funds for important causes like educational funds and services for the elderly which help sell the lottery as a net societal good, not a societal harm, convincing people that they're not losing money.

Scratch off tickets are designed to be addictive, easy to carry with you, flashy. Lottery operators have also tried to make buying tickets as simple as possible, installing vending machines at gas stations and grocery stores and turning to online platforms to sell tickets, too.

EthanWS61 karma

"Lottery is a tax on stupid people"

Do you agree?

trevintexas2 karma

it's hard not to agree, but I don't think that makes people who play the lottery stupid. I've also heard "Lottery is a tax on people who are bad at math." but I think for a lot of people there's something to the hope behind potentially winning a lifechanging amount of money, an itch I think prize linked savings account scratch, too.

AALen1 karma

How often are jackpots split between multiple winners? Or more to the point: how do I account for the possibility of multiple winners when calculating return-to-player?

trevintexas-1 karma

When the jackpots get very big, it's quite common to get split between multiple winners because so many more people participate when it's this big.

When jackpots are lower, fewer people play, and there are far fewer splits.

phillyeagles5401 karma

Could you DM me the winning numbers for tonight? Please and thank you ☺️

trevintexas2 karma

try 1 2 3 4 5 6 7

phillyeagles540-3 karma

Lol thanks! And now for my serious question…Do you believe there could/should be a limitation or rule in place that restricts highly populated states (Ex. California) from continuously winning? I feel like, more often than not, we hear the same states win over and over…

trevintexas3 karma

No! It's a random outcome. More people who participate, more likely winner will be there. California has 40 million people. Plus Caifornians might play the lottery more than ppl in other states due to advertising etc.

Single-Reindeer-85631 karma

how much of the revenue the lottery generates goes back into prizes?

trevintexas2 karma

varies by state, in California 50.2% of Powerball revenue goes into prizes. In New York it's something like 51.5%.

tyedge1 karma

Is there good data on how many tickets get sold for drawings with huge jackpots? My understanding was that roughly a dollar of each $2 ticket fed the increased jackpot from drawing to drawing.

Where is the crossover point where multiple jackpot winners begins to become more likely?

Is there a psychological element to choosing numbers to reduce the likelihood that others split a jackpot with you? (Example - avoiding lower numbers that come up in birthdays, for example). Or are there so many quick pick tickets that chosen numbers are a drop in the bucket?

trevintexas2 karma

I think I remember seeing some numbers on Powerball jackpots that for a $100 million jackpot they on average sold 200 million tickets. For their $1.586 billion jackpot back in 2016 Powerball sold 758 million, so yeah, a sizeable difference in the number of tickets sold between lower jackpots and higher jackpots.

Multiple jackpot winner odds increase with every ticket sold, but more likely when the number of tickets sold exceeds the number of possible combinations. The number of possible combinations for Powerball is 292.2 million.

I'm sure there's some slight advantage on commonly picked numbers vs. uncommonly picked numbers or combination of numbers but considering the number of tickets that are quick picked (70-80%) vs. manually selected it's probably negligible.

jay_fresco1 karma

Which has the better odds, Scratchers or the actual picking numbers lotto?

trevintexas2 karma

Scratch off tickets usually have better odds of winning a prize than Powerball or mega millions tickets. But those prizes tend to be smaller than the Powerball or mega millions jackpots.

jay_fresco1 karma

What’s the best way to win the lotto?

trevintexas5 karma

The best way to win something like Powerball or Mega Millions would be to buy a ticket for every single combination of numbers possible. You probably wouldn't make money on it, but would be the best way to "win" the lottery.

flashmeterred1 karma

How rich do you get if you're hit by a meteorite?

trevintexas9 karma

Meteorically rich

FriedMattato1 karma

I generally only buy one 3 dollar ticket per drawing when the pots are stupid large. Is this about as well as one could play without going nuts on buying tickets?

trevintexas4 karma

How do you feel after buying it? Hopeful? If it affords you some escapism and is fun to dream about what you’d do with the winnings I don’t think the occasional ticket is a bad thing

If you feel guilty and like you just threw away money after purchasing then what’s the point?

Chaminade641 karma

I was actually discussing this today with my son. Have you ever researched the threshold prize amounts that bring out folks who normally don’t play lotto? It reasons that while the odds of winning don’t change regardless of number of players the chances of splitting the prize increases with more players. At what amount do the ticket buyers come flooding in? 500? 750?

trevintexas1 karma

the $1 Billion number is huge for a lot of people but I think it comes down to press and media coverage. The more people hear about it in the news, big winners, etc. then it drives ticket sales for sure.

amorousambrosia1 karma

I thought annuity payments would pay out equal installments over the next 30 years. Example 1B over 30 years is 33M approx each year but from what I've heard that is not the case and the first few years are very small and then increases over time. Can you clarify please?

Also, Texas has a law (HB 59) to remain anonymous for prizes above 1 Million. Do you know if that is only with state lotteries (like Lotto Texas) or can it be with lotteries like PowerBall and Mega Millions that are played across the entire country?

trevintexas2 karma

Yeah they typically do increase over time. This is so they can use a bigger headline number but push our the payments into the future, resulting in a lower present value, but higher overall payments.

I am not sure about that anonymous law.

djk23211 karma

I always thought that if I won the lottery I would start my own lottery. Would this be a good/feasible investment?

trevintexas1 karma

You could start a sweepstakes, but private lotteries are illegal in most (all?) states. Probably don't walk a knock on your door from the feds :)

boltman12340 karma

How to win?

trevintexas3 karma

You win $2 every time you don't buy a Mega Millions ticket

Renovateandremodel0 karma

Would it be easy to take all of the numbers that have been played, the frequency o number of played, and purchase those number?

trevintexas2 karma

You certainly could buy the most frequently chosen numbers of the past, say, 3 weeks, but it's completely random so there's no guarantee that would provide you any sort of statistical advantage

rededelk-1 karma

Why did powerball go from 1 to $2? Should be obvious I guess, but it kind of erked me. I buy a ticket or 2 occasionally but can't remember the last time, kind of silly thoughts about what I would change being suddenly wealthy. I "won" $150 one time but in reality it was just buying back sunk money. Thanks and I think it is a good discussion to have

trevintexas2 karma

I am not fully sure on this one, but they likely just wanted to be able to have "bigger" prizes with a bigger entry fee.

hankado-1 karma

Is studying past drawing, frequency patterns such most , least drawn and lottery wheels worth doing?

trevintexas1 karma

Depends on the game. For games of true randomness, no. But there have been loopholes in some games that people have exploited by studying how the game is designed and constructed.

A_L_A_N_-5 karma

Are the State Lottos (MM & PB) cheating? Are they cheating at the ticket terminals, like choosing numbers for people they don't like, and are they also choosing winning balls too?

trevintexas3 karma

nah, the evening drawings are heavily audited and monitored and is unlikely there would be any way to predetermine the outcome.

A_L_A_N_-2 karma

I completely disagree. They apparently had talked about it in the '80's in order to ensure the money isn't used by any type of criminals, like narco terrorists ect. Or people they disagree with ideologically. And I for one, feel like they are cheating it and showing off about it like they can't be stopped.

trevintexas2 karma

Have you watched McMillions the docuseries?