Tickets vs. Tickers
One man's quest to find out if scratch tickets are a better investment than today's stock market.
– Homer Simpson
Lotto sales are way up across the country. In Massachusetts, the lottery hit a record high of $4.7 billion in sales. And in my home state -- New York -- lottery sales were up $177 million in the last 9 months of 2008. Scientific Games (SGMS), the largest purveyor of scratch tickets, reports that revenue is up in 25 of the 42 states that have lotteries.
None of this should be surprising. The less money people have, the more tempting the fantasy of hitting it big, quick.
I'll admit it - a few weeks ago, I bought a $1 scratch ticket. I thought, "Why not?" I ended up winning $7, and proudly announced the news to the Minyanville staff. Kevin Depew jokingly acknowledged that I had greatly outperformed the S&P with my little “investment.”
And then an idea was born. With the market in the shape that it’s in, which is the better investment? Scratch tickets or the S&P?
Over the next 4 weeks, I’ll spend $100 on scratch-tickets. At the end of each week, we’ll compare how I did relative to how that money would have performed in the S&P.
Let the games begin.
February 23: Day 1
Over at Minyanville, Terry Woo’s got his eye on JPMorgan Chase (JPM). Todd Harrison’s talking about Bank of America (BAC).
But I’ve got my eye on a little game called Lucky 7s. Here’s all you need to know: “Rub 9 spots. Get 3 7s in any row, column, or diagonal and win ‘Prize.’ Get 2 7s and a $$ in any row, column, or diagonal, and prize doubles.”
What’s at stake? The chance to win $2,700 instantly.
I’ll be seeing the newsstand guy a lot over the next month, so I introduce myself him. He tells me his name is Harry (Hari?). After a few pleasantries, he hands over my Lucky 7 ticket.
Back up in the office, I scratch away. And lose.
February 24: Day 2
A little perspective on odds.
According to the National Safety Council, the chances of dying from “contact with other and unspecified venomous animals or plants” is 1 in 635,191. That’s actually better than my chances of winning $2,700 from a Lucky 7 ticket (1 in 678,461).
So instead of Lucky 7s, I opt for Take 5, a game with slightly better odds. The chances of winning Take 5’s $5,555 grand prize are 1 in 529,200. That’s markedly better than my chances of perishing from “ignition or melting of nightwear” (1 in 635,191).
I scratch off the Take 5. And lose again. I’m beginning to wonder if this whole scratch-ticket experiment is a fool’s errand.
I’m also wondering how on Earth the odds of dying from an unspecified venomous animal or plant are exactly the same as dying from exploding underwear.
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