Oct. 5th, 2013

chris: (crisis)
Probably the least interesting of the world's games with which I am obsessed is the UK's own national lottery game, "Lotto". Players choose six numbers from 1 to 49 and aim to match at least three of the six winning numbers; ideally all six for a share of the jackpot, but there is a bonus prize for matching five out of the six and the bonus ball. There are some moderately large changes to Lotto, starting with this evening's draw.

What are the main changes?
  • The entry fee is increasing from £1 to £2 per play.
  • The (theoretically not quite) guaranteed prize for matching three numbers is more than doubling from £10 to £25.
  • The prizes for matching all six numbers and four of the six numbers are expected to increase, but not quite double.
  • The prizes for matching five out of the six numbers, with or without the bonus ball, are expected to fall.
  • There will be an additional raffle in each draw, which will see at least fifty tickets per draw selected to win £20,000 each. Rollover draws will have more than fifty winners.
Are your chances of winning improving?

Not so you'd notice. Technically: yes, but only very marginally, as a result of the introduction of the raffle.

Do the changes make the game more generous?

Er.... probably, a bit, but it depends what you count? The truth is disappointingly opaque and a little complicated. On the other hand, I probably wouldn't be posting if this had an easy answer. Eyes down for a full house. )

Hmm. So why have these changes been made?

It's probably fair to note that the price of a lottery ticket has always been £1 since the game's start in 1994, and £1 then is worth around £1.69 now. (70% inflation over 20 years? Strikes me as fairly low.) On the other hand, I thought £1 was a pretty aggressively high price at the time when the game started. As a point of reference, I know three sandwich shops within walking distance of work where you can still get a mighty good sandwich for £1.

I have three theories:

1) Any publicity is good publicity

This change has not attracted positive comment. Lotto sales figures have been falling for years. Making an unpopular change and then changing back within reasonably short order might be the shot in the arm to attract attention. (On the other hand, it didn't really work for Coca-Cola.) I reckon there is at least a 10% chance that the raffle element will be removed by the end of 2015. They might or might not wind the price increase back, too.

2) Profit

I suspect that the reason why these changes have not proved popular is partly the increase in price and partly because it will be awfully fiddly to check whether your ticket has won the raffle or not. (Checking against one winning number is fine, checking against fifty is... laborious. It's possible to get ticket sellers to check for you, but I think people will think it's rather lame in practice. You don't often see people getting their tickets checked - people think it just holds up the queues - and I don't think people will get into the habit.) Consequently, I think a lot of raffle prizes will end up going unclaimed, and I suspect that this may not be accidental.

Now it's not the case that Camelot get to keep these unclaimed prizes; prizes unclaimed after 180 days go to the good causes along with the statutory 28% of sales revenue. On the other hand, Camelot are only permitted, by the terms of their licence to operate the national lottery, to keep profit according to how much money is generated for good causes - the more they generate for good causes, the more profit they can keep. That said, if sales suffer as a result of the changes, it's hard to see this route for diverting more money to good causes making up the difference.

3) Perhaps they're right

There's always the outside possibility that Camelot might actually have got things right and know things that we don't...

I'd be prepared to believe that Camelot have done their research and found that players can't get excited about winning a few thousand pounds these days and that £20,000 is the lowest sum which starts to excite people. It's roughly the price of a top-end family car, or a deposit on a house. TV producers may also have some useful input into current trends in mass psychology in this regard. It's not as if there hasn't been a reasonably consistent undertone of "there are too few big winners and the big prize is too big", so this seems like an obvious response to it.

If this is the case, then going from maybe a jackpot winner or two and a handful of winners of 5+bonus per week to at least a couple of thousand winners of £20k per year might actually prove popular; the chance of you knowing someone who has had such a pleasant, but not overwhelming, win will go right up. It might be hard to get excited about winning £20,000 and sharing it as part of even a small syndicate, though.

Tonight's draw, as the first of the new format, has a guaranteed £10,000,000 jackpot and a guaranteed thousand £20,000 winners. Is it worth playing?

Depends on how many players there are. Here's my working. ) We can expect there to be more paid out in this draw as prizes than taken in ticket revenue if there are fewer than roughly 21,100,000 tickets sold.

So how many tickets will be sold?

Now that's the interesting question. Let us look at Richard K. Lloyd's sales figures page. The general trend is that Saturday draws were getting about 26 million tickets sold - slightly more during rollovers, but they don't make anything like the difference that they used to.

Reasons why sales might fall include, but are not limited to:
  • Some people have said they'll stop playing now the tickets have gone up from £1 to £2;
  • Other people have said that they'll transfer from playing Lotto to playing EuroMillions for the same reasons;
  • Other people have said that they'll cut the number of tickets they buy in half;
  • Tickets have only been on sale for this particular draw on Thursday, Friday and Saturday, rather than the whole week as usual, which I reckon may be a huge factor;
  • Multi-draw tickets have only been sold up to and including the last £1/ticket draw, so anyone wanting to put a multi-draw ticket on has had to do so in the last two days likewise.
However, there are many people who will have not registered the price change at all, many people who are so attached to their numbers that they will keep playing no matter the price and other people who don't normally play but might be attracted by all the added money this week. (The added money strikes me as being a huge factor, but there's only been one draw in the last 18 months with over 32 million tickets sold, so I don't think it's going to have as much of an effect as might appear to be the case.)

Perhaps the most telling indication is Camelot's own estimate quoted above that Wednesday draws might be expected to have 9 million Lotto entries and Saturday draws might be expected to have 16 million Lotto entries. Putting it all together, I reckon that there will be 22 million sales for tonight's draw, but am no more confident than estimating a range of 16 million to 28 million sales. Another way of looking at it is that I expect the number of drop-outs, cut-downs and (most significantly) those who intend to play but don't get around to it to exceed the number who don't normally play but choose to do so for tonight only.

So will you be playing tonight?

I haven't decided. I wouldn't go so far as to say that this Lotto draw is a good one to play, but - at the very least - it is rather less bad than usual.

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