Hi! I’m Adam Moelis (proof), co-founder of Yotta, a company that pays out cash prizes on savings via a lottery-like system (based on a concept called prize-linked savings).

I’ve been studying lotteries (Powerball, Mega Millions, scratch-off tickets, you name it) for the past 5 years and was so appalled by what I learned I decided to start a company to crush the lottery.

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 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: 2451 • Responses: 85  • Date: 

ShotFromGuns2292 karma

  1. If the purpose of Yotta is to use lottery psychology "for good," why have you historically indulged in practices that seem to exploit those mechanics for your own benefit to the detriment of Yotta customers (particularly Crypto Buckets, which pushed users toward uninsured deposits by offering additional tickets over the FDIC-insured deposits) and the Hot Pot promotion (which tanked the APY for every single user but one lucky winner)?

  2. Now that you've gotten rid of Crypto Buckets and ended the Hot Pot promotion, how can we trust you to not go back to exploitative schemes the next time they look like a good way to make yourselves a quick buck?

  3. Are you ever going to make it easy to track our actual realized APY over time (ideally on a monthly, annual, and all-time basis) so we can see what we're actually earning with Yotta vs. what we could be earning elsewhere? The app only shows the current month to date plus last month's APY, and I literally can't find the info on the website at all.

  4. Why should I keep more than a token deposit at Yotta (for 1 ticket/week, same as the regular lottery) when real HYSAs are offering 3%+ APY?

adammoelis1978 karma

1) Crypto Buckets was a 100% optional product in which we made clear of the added risk vs. FDIC insured accounts. We never indulge in exploitative practices, but we do give our users options for the right offerings that might suit their needs and risk appetites. FDIC insured is one type of investment, Crypto Yield is another type of investment with a different risk profile. I don't believe everyone should have all their funds in FDIC insured accounts. There is 100% a place for higher yielding investment products in a consumer's portfolio. These higher yielding products come with higher risk of course.

As for the Hot Pot promotion, this was intended to be a fun promotion to have a growing rolling jackpot every week, attracting many people for the big jackpot aspect that draws people to PowerBall. This wasn't to our benefit - we paid out more than we did before by running it.

2) These weren't exploitative schemes. The Hot Pot promotion was temporary and when Crypto markets became volatile and the market environment changed materially from when it was launched, we made the decision not to offer it anymore out of an abundance of caution. We will always put our customers first in these decisions.

3) Thanks for the suggestion. We will consider this yes, but have not gotten to it yet.

4) If you are trying to maximize every last penny of your savings and not have any fun or entertainment factor, you can get more yield than Yotta. Yotta is intended to provide great value in the form of yield while also being exciting, fun, and social. You won't get that anywhere else from savings products. And no where else can you get the same upside from a savings account. So yes some people will get less than 3% and some will way more - this is part of the fun and we think this will help motivate people to save instead of play the lottery. Most consumer deposits right now sit in sub 0.10% yielding accounts and no one is motivated to save. We want to change that.

Arctinius707 karma

Thanks for answering tough questions.

adammoelis1593 karma

Thanks. I don't believe in tough questions. Only questions. I'll always answer honestly. Nothing to hide

1541drive393 karma

Thanks. I don't believe in tough questions. Only questions.

Why does my extended family resent my success despite also being successful themselves?

adammoelis1308 karma

That is a question I can't answer

Ziltoid_The_Nerd174 karma


adammoelis1184 karma

Very meta

Ausdwen116 karma

My money is on this won't get answered.

adammoelis179 karma

Just saw this - posted an answer

Bimlouhay8321 karma

Hey OP. Can we get some answers here?

Solipticalmachine874 karma

Can you explain why the odds are less than being crushed by a meteorite when someone will likely win soon but we don’t hear about people getting crushed by meteors? Is this a media thing and there’s more meteor deaths than we realize???

adammoelis1605 karma

So it's kind of a headline thing. It's mainly based on probability of a meteor hitting earth and killing a large number of people in a given year. It never really happens, but probabilistically because it could wipe out a huge number of people, you are more likely to die that way. I haven't audited the data behind this, but that's the idea.

Watch out when you cross the street next time...

fa9103 karma

Watch out when you cross the street next time...

what are you planning?

adammoelis1143 karma

This is the meteor coming

jmeh_2000685 karma

There was a fascinating article in the New Yorker recently that described the history of the lottery in different societies being used to prop up wars and overspending governments going back to the Roman era.

I think it mentioned that the money brought in to local governments from the lottery is often earmarked for a specific cause such as education in order to keep it's popularity up, even though it often goes elsewhere or does not cover much of the education spending need. Is there a resource where we can see state-by-state where the lottery money is going to?

(EDIT: Found the article. https://www.newyorker.com/magazine/2022/10/24/what-weve-lost-playing-the-lottery)

adammoelis1332 karma

Yes every state publishes this. See https://nclottery.com/Content/Docs/PAFR_2021.pdf for an example

spamjwood641 karma

If you use the "easy pick" option are you more likely to get a duplicate ticket to someone else using the same method?

adammoelis1907 karma

No these systems are all well audited and secure. It's truly random.

housebird350629 karma

Is there a way to calculate just how big of an ass I would be if I were to win the $1.2 Billion Jackpot?

adammoelis1911 karma

Yes. Ask your friends and they will know the answer.

Toger5 karma


adammoelis119 karma


Shad0wWalker-_-550 karma

How do you plan to "crush" lottery ?

adammoelis11058 karma

We offer a way to win a life changing amount of money via a lottery-like system in a savings account. We want to give people the feeling of the lottery in a healthy way. Hopefully we can become as big as Premium Bonds in the UK which has over $100B in deposits. It's a lofty goal to "crush the lottery" but I really hate the negative impact it has on society.

everfalling220 karma

Where does the money come from for the prizes?

Hole-In-Six775 karma

Using your money to make loans to others. It's how traditional banks work but instead of giving everyone a 0.33% APR rate on their savings, they combine it and give away a larger chunk as winnings of a lottery amongst members.

adammoelis1321 karma

Yeah exactly

oren0514 karma

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,

What percentage of households play at all, and what percentage are putting in huge amounts to offset them? I'd guess the median is far less than the mean here.

Is there data on how the spending breaks down on demographic lines like income and race?

What percentage is being spent on scratchers vs. local drawn games vs. national ones like Powerball and Mega Millions?

adammoelis1406 karma

About 50% of adults play at least once a year. Median is definitely well below the mean, but not sure what it is. A lot of this data is survey based. Across incomes, on an absolute $ basis, lottery $ spent are similar, so for lower income it's a much higher % of income.

Antisystemization113 karma

Where does your $640 stat come from? And that's just for the lottery, not all gambling, correct?

adammoelis1124 karma

Just take total lottery spend in the US and divided by total number of households. You'll get something now north of $640

Chaminade64479 karma

My dad used to buy a “full year plan”, two plays in each weekly Lotto (this was back in the 80s). He played a combo of birthdays and anniversary dates and was afraid he’d miss a week and he’d find out later his numbers won. Do they still offer that? He’d never check the numbers, just kept his fingers crossed a check would show up. He used to say that when a check would come in it was a crazy rush, anticipating how big it might be. Largest one he ever got was for second lowest payout……never covered his purchase price, but he loved those few times he had an unopened envelope that might be “the big one”.

adammoelis1205 karma

Never heard of this kind of thing before! Maybe it's not around anymore

RandomParanoidGirl408 karma

How do I win?

adammoelis11076 karma

Don't play!

Andrewwwwwww327 karma

Is there any notable difference in winning for those who pick their own numbers vs those who have the machine generate them?

adammoelis1491 karma

No difference other than you don't want to pick numbers that other people might pick since you want to reduce your chances of splitting the prize.

Soturi34305 karma

Do you play the lottery?

adammoelis1457 karma

I have maybe three times in the past when the jackpot gets really massive, but I don't anymore.

sergius64295 karma

So - how destructive is the lottery compared to other gambling games?

adammoelis1568 karma

General rule of thumb, the bigger the jackpot the more they can get you in with that number and the worse the expected value for the consumer. All gambling games are different, but the PowerBall and MegaMillions are likely to be the worst when their jackpots haven't ballooned. If the jackpots are massive like tonight, then their EV is much higher.

Another note - lotteries and scratch offs are monopolized by the government. There is no competition, so these games are way way worse than casino games on an expected value basis.

On the flip side, it's easier for people to sit at a blackjack or roulette table all day long and lose more money.

bigbiblefire117 karma

Ehhh...person has to get to the casino to sit at those tables, or have the means (nowadays) to be able to play it virtually with online money.

People in low class areas can always make it to a corner store or gas station to grab a scratcher. And have you ever seen the folks who just camp at a gas station register? Buying a stack, just scratching the barcode and scanning em...not even playing the game itself...I mean there's $20+ cards, too.

adammoelis1116 karma

Yeah fair enough. Once they're in a casino though, gambling addicts really suffer.

sergius6470 karma

I guess I meant as far as gambling addiction. Sounds like it's less destructive than the casinos or betting on races because people can't play it all day and night?

adammoelis1105 karma

That's my opinion. But then again, people spend way more on lotteries in aggregate. It's a tough question though.

cherrylpk267 karma

Would you be willing to lie to me and tell me that one of my three tickets will win?

adammoelis1569 karma

I have a good feeling about your tickets tonight.

cherrylpk152 karma

YES! If I win, I’m buying you a car. Like win-win, not like a two-dollar win, unless you like matchbox cars.

adammoelis1173 karma

I'm going to hold you to this. DM me your numbers!

sparkdaniel231 karma

Why are most winners bankrupt in a couple of years? Or is this a myth? Of 100 winners how many are broke after 5 years?

adammoelis1547 karma

It's not a myth... it's similar in nature to why people who all of a sudden earn a ton of money go broke (a lot of athletes too). Friends and family come asking you to buy them things, invest in their businesses and it's hard to say no, people spend excessively on crazy stuff... we need better financial education. The annuity option would help people with creating discipline in spending, but almost everyone takes the lump sum.

King-Wuf179 karma

How heavily taxed are lottery earnings? What kinds of numbers could be taxed on a pool like we have at the moment

adammoelis1308 karma

If you won the jackpot, you'd be taxed at the top marginal tax bracket, so around 37% federal plus state and local on top of that.

KnowLoitering77 karma

Could you explain a bit more why some people say it’s “better” to play the lottery when the jackpot is higher and more people are playing?

adammoelis1149 karma

Yeah because a lot of the value from the lotteries come from the biggest prize, when the jackpot is higher, the expected value of your winnings and ticket is higher. It's a better gamble at that point because prizes are bigger. However, if too many people play, you also are more likely to split hat big prize with more people, so it works both ways, but on net, the bigger the jackpot the better the value (assuming the game has the same odds).

lobo2r2dtu75 karma

Are the lottery tickets vending machines accurate 100% when scanning your tickets for the winning number(s)?

Also, who owns the lottery? And how is the money (profits) distributed among the ownership, where does the annual 100 billion dollars go?

adammoelis1168 karma

No reason why the scanners shouldn't be 100% accurate. Never seen an issue there. The lottery is run by the state governments around the US. PowerBall and MegaMillions specifically are multi-state lotteries but there are around 7 states that don't offer them.

Lotteries are illegal for private companies to run, so the government "owns" it I suppose.

About half the lottery proceeds go to paying winners. The other half goes to overhead - around 6% go to the stores that sell tickets, 10% go towards general admin and overhead to run the games, and then you've got a big chunk of the remainder of that half that goes to state government revenues to fund government programs.

K1llG0r3Tr0ut54 karma

What are the signs that someone is starting down the hole of lottery addiction?

adammoelis189 karma

If they are spending an amount of money on it that they can't afford to be spending.

Littlebigs541 karma

Is it better to take lump sum or annuity?

adammoelis1152 karma

Annuity value is healthier for self control and not going broke. However, purely value, the lump sum is likely the better option, assuming you invest it wisely.

OddballLouLou39 karma

I’ve read you’re more likely to win if you choose your own numbers? Is that true?

adammoelis173 karma

No, not true!

Soturi3431 karma

The states who provide a lottery do they put the revenue from that into a good place, like education?

adammoelis161 karma

Yeah they do. That's the good part about it, but there's a lot of inefficiency and cost in the system before we get to the funds that go towards those programs. A lot of waste in between.

AtticusBullfinch24 karma

You say "You're more likely to be crushed by a meteorite than to win the Powerball." That sounds like hyperbole. There are probably 10 Powerball winners per year. When was the last time anyone was crushed by a meteor?

adammoelis124 karma

It's mainly based on probability of a meteor hitting earth and killing a large number of people in a given year. It never really happens, but probabilistically because it could wipe out a huge number of people, you are more likely to die that way. I haven't audited the data behind this, but that's the idea.

Chaminade6419 karma

Would you recommend a cap on the top prize, (say 750m) and if there are no grand prize winners grow the prize money handed out to second, third, etc.? Would that continue to attract the “only when it’s big” players?

adammoelis157 karma

I think the rolling jackpot is a huge draw and the size of that headline figure is the biggest marketing driver they have.

Lallner19 karma

Given the odds of multiple winners, tax implications, and actual pay-outs, at what point does does the jackpot have to be to have a positive expected return?

Languid_lizard40 karma

I did this analysis a while back and came to the conclusion that the answer is never. Ticket sales start to grow exponentially after a certain point and the odds that you’ll have to split the pot several ways start to become very high. I want to say the sweet spot was somewhere in the $500M - $1B range where your expected value approaches even but doesn’t quite get there.

adammoelis130 karma

Yeah this is right especially when taking the lump sum value or present valuing the annuity payments, which you should do. Never really get quite to positive EV when factoring in everything (taxes, splitting, etc).

adammoelis115 karma

It's a tricky question because with bigger jackpots, the odds of sharing it with multiple people grows because way more people buy tickets. At the current jackpot level, you can make some reasonable assumptions and get to it being close to positive EV at the $1.2B annuity value prize.

GotMoFans14 karma

Is it wrong to quote the annuity total (payout over 20 years) rather than the actual money that would be paid out (lump sum)? Should marketing be required to give the estimated amount of the prize the lottery has in the moment?

Edit: pointed out the annuity is 30 payments over 29 years.

adammoelis117 karma

They do also give the lump sum value I believe... so I don't think it's wrong, but it is definitely a rosier picture.

umpfke11 karma

Wait... 105 billion? Where does that money go to in the US?

adammoelis138 karma

Depends on the state, but roughly 50-60% back to the prizes, 6% to retailers.

Every state publishes their lottery financials publicly so you can see this for yourself actually Check out https://nclottery.com/Content/Docs/PAFR_2021.pdf for example. Very interesting to look at these.

TheClayroo10 karma

What are the numbers for tonight?

adammoelis125 karma

1, 2, 3, 4, 5, 6, 7

briantellectual23 karma

1, 2, 3, 4, 5, 6, 7? That's the same combination on my luggage!

adammoelis120 karma

Are you Dark Helmet?

TuxMcCloud5 karma

When I win with these numbers what would you like as your compensation?

adammoelis112 karma

50% of the pot!

06EXTN9 karma

winners who choose lump sum aren't as crazy as people make them out to be, are they? losing 1/2 your winnings for all of it at once vs the full jackpot that you MIGHT get if the lottery lasts 30 years? (I'm not saying there's a chance of imminent governmental collapse...I'm just saying it's always a possibility)

adammoelis122 karma

The lump sum option is mathematically better if you invest it properly, but tougher on self discipline

shocktopper19 karma

This may be more stats question but is it true that say that consecutive 1,2,3,4,5,6 vs random 12,1,25,20,31,40 has the same odds? (I'm no math guy)

But I did read that common numbers are the worst as there's a bunch of other people playing the same one.

Also would you happen to know any success stories after people won the lotto? I seen tons of sad stories.

adammoelis116 karma

Yeah common numbers are worse but ONLY because more likely that other people use them and you want to reduce your odds of splitting the prize. I have not seen any success stories. I'm sure there are though.

Oztravels6 karma

Is it true lotteries were invented to catch time travellers?

adammoelis15 karma

No not true

thevictheory5 karma

Are the drawings really random or can/do they control when there will be a winner?

adammoelis114 karma

They are random. There are very strict security protocols for these drawings.

Popcorn534 karma

With all the taxes involved for winners, isn't' the real winner the government? They make income from the sales, and then have vig on the other end.

On a win, how much would a government bring in, between sales, and taxes, versus payout to the big "winner"?

adammoelis19 karma

Every state publishes their lottery financials. See this for example: https://nclottery.com/Content/Docs/PAFR_2021.pdf

About 50% - 60% goes to winners.

MayorBobbleDunary3 karma

Who's making money? Is it the state? A independent company? Who profits?

adammoelis13 karma

The government funds programs from it.

raikster3 karma

Can I buy Powerball tickets online in Europe and not get scammed?

adammoelis16 karma

My knowledge of the European market is limited unfortunately. In the US, there are now options to buy online in some states. I would imagine Europe has something similar but it would depend on the country. Just do diligence before trusting a random app.

Alternative-Fox62363 karma

My parents always play the mega millions, or Powerball or whatever it is and always tell me "you got nothing to lose!".

I always get pissed and tell them I will never play the lottery because its negative EV but they just don't care.

Any advice on expressing my view better to have more of an influence on them or is there no changing the stripes of a tiger?


PS - They absolutely don't have a gambling issue or anything but it just annoys me every time they mention it to me and tell me to play since the amount is so high, etc. etc.

adammoelis112 karma

Do the math for them. $10 a week is a $520 per year. That's $5k over 10 years, etc etc. You're likely to win like 20% of what you put in, something super low like that. So you lose 80% of that.

Show them that "you have nothing to lose" mathematically over 10-20 years is actually a real meaningful amount of money. And this is money you could be investing at 7-8% in index funds and compounding over time.

cherrylpk10 karma

Is it hurting you in any way that they play? Let them have fun.

adammoelis13 karma

Agreed as long as it's not hurting their lives too

TaliesinMerlin3 karma

Many people don't buy a lottery ticket until the pool gets large. They say things like, "You can't win if you don't play" and seem to believe that only playing when the pool is large is smart.

Are they right? If so, what is a good counterargument to that behavior? (Appeals to odds and mathematics don't seem to work with this crowd.)

adammoelis19 karma

You also can't lose if you don't play! I think the best argument is to show over 10-20 years what playing the lottery would do to the value of your money versus investing it and yielding 7-10% per year in market index funds on average. The numbers add up. At low $ levels no one cares, but when you show how this loses you thousands to tens of thousands of dollars over time, then it starts to sink in.

Vazadi193 karma

How does joining a lotto pool effect EV, if at all?

adammoelis13 karma

The more people that play, the more the likelihood of sharing the prize, which hurts EV. But the jackpot also gets bigger, which increases EV. The real increase in EV lies in when no one wins the jackpot and the funds carryover to the next game. That's really the only way EV grows.

BSC25M2 karma

Is there a rough formula to figure out when the EV dictates playing?

On the surface it seems easy, but with taxes and possibility of splitting the prize, I know it’s more complicated…

adammoelis13 karma

There are a lot of calculators online you can find. Just make sure they do indeed factor in the lump sum not the annuity value and also taxes and some assumption around split prizes. The only major unknown is really the split prize odds, but there's good data historically around the odds of that.

oren02 karma

What is the expected value of a purchased Powerball ticket when the jackpot is $1.2B, factoring in taxes and the chance of a split jackpot? At what level of jackpot does the mathematical expectation of a single ticket purchase turn positive?

adammoelis13 karma

With reasonable assumptions it's likely somewhere around losing 30-40% of your money when factoring in everything. Jackpot needs to be closer to $2B I believe on an annuity basis to be around breakeven. Haven't run these numbers lately, but this should be close.

php42 karma

In Arizona(not sure about other states), we have lottery vending machine.

I wonder if you have stats on how many people have actually won more than 5 digits jackpot?

Feels like i used to win a lil when they didnt have machines 😂

adammoelis13 karma

I don't know off-hand, but five digits is pretty rare..

Hiro_Pr0tagonist_2 karma

Do lottery winners tend to be people who buy tickets with a certain level of frequency/bought a bunch of tickets for the current drawing?

adammoelis14 karma

Sure the more tickets you buy the more likely you are to win, so yeah it's more likely to be a frequent player in that sense, but that player is also more likely to lose a shit ton of money too!

[deleted]2 karma


adammoelis137 karma

There's really no way to maximize your "odds of winning" if we're talking about Powerball in particular, other than to play the scratch-off or lottery games that have the best odds.

Sure the more tickets you have the more likely you are to win something, but you're also more likely to lose more. The net effect is if you play a game in which the odds are against you, the more volume you play, the more assured you are of losing due to the law of large numbers.

Gemmabeta17 karma

"Maximizing" your odds of winning the Powerball is basically saying that you went from a 1-in-300 million odds to 1-in-275 million odds.

The number did go up, but not that's going to do you much good.

adammoelis118 karma

Yeah there's nothing you can do to create better odds other than play the game when the jackpot is highest which results in a higher expected value for you.

dhork15 karma

How can you maximise your odds of winning?

That's the wrong way to look at it. Your odds of winning are extremely small, no matter how many tickets you buy or how you buy them.

However, you have zero chance of winning with no ticket. So compared to that, your odds of winning with one ticket are infinitely higher! (And your odds of winning with two or more tickets are similar).

So, if you want to be part of the fun, buy a single ticket. Dream about what you would do with all that money, then don't be surprised when you don't win.

(One exception: if your workplace has a pool, go into that instead. You don't want to be the only schmo in the office who still needs to work if they win.)

adammoelis13 karma

Yeah what you really care about is your net profit expectation

PeanutSalsa1 karma

If someone wins the lottery, do they have to claim all their winnings on their taxes in the year they won them?

adammoelis11 karma

If they take the lump sum, yes

Megamannyac1 karma

What’s the “winning” strategy?

adammoelis12 karma

Either don't play, or play only to an extent you can afford to

Jessintheend1 karma

If you could change something in the system, what would you do?

adammoelis12 karma

One thing I think is obvious is to make the lottery concept legal for private enterprise to run. It sounds weird but it would make the game very close to neutral expected value and people would play it and lose less money.

I would also have governments promote prize linked savings, which is a healthy way to get the feeling of playing the lottery.

[deleted]1 karma


adammoelis12 karma

It's mainly based on probability of a meteor hitting earth and killing a large number of people in a given year. It never really happens, but probabilistically because it could wipe out a huge number of people, you are more likely to die that way. I haven't audited the data behind this, but that's the idea.

olddoc11 karma

How can the lottery get away with falsely advertising a $1.2 billion prize when the correct value is $596 million?

adammoelis11 karma

It's the annuity value that they would pay out over time. So technically, they are offering $1.2B over 30 years.

princeofkats1 karma

Do you know how lotteries around the world differ?

adammoelis11 karma

Not as familiar unfortunately

varmint7001 karma

I’ve always been confused as to why these giant virtually impossible payouts exist. Why don’t lotteries reduce the odds in order to distribute more wealth to more individuals into the economy? Surely there’s more benefit to wider distribution of wealth both in terms of spending and taxation. Thus makes zero sense to me. Why not generate 1000 millionaires instead of 1 billionaire that simply hoards the money into partnerships and leeches interest?

adammoelis11 karma

The headline jackpot creates a huge marketing opportunity for them. It's what drives everything. The $1.2B headline creates all this buzz. A lot of smaller prizes wouldn't do the same.

varmint7001 karma

Right, I get that, but wouldn’t you as a player be happy to know your odds of winning life-changing amounts of money were 1000x better? Surely that psychology could be nurtured into marketing. I mean I would sure as he’ll be more inclined to play under those conditions than these.

adammoelis11 karma

Humans aren't rational remember!

Kampizi1 karma

The past 5 winners, did they do auto-pull or pick their own?

adammoelis11 karma

I am not sure.... but it doesn't matter!