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Thursday, May 9, 2013

Hot Lotto Changes on March 12, 2013 - Not so Hot!

Beginning with the March 15, 2013 drawing, the MUSL Hot Lotto game format will change.

While we normally welcome improvements to the various lottery games, we do not believe that the new 2013 Hot Lotto changes will assist in attracting more players. Overall, the odds of winning any prize increase from 1 in 16.09 to 1 in 17.22, while the amount of money returned to the players decreases from 32.9% to 27.4%. This means it will be harder to win less money!

Hot Lotto used to be a small niche game offering a chance to win a minimum of $1 million at odds less than a Pick 6 game. Now, a player can win a little more than a million dollars at twice the odds of Pick 6.

Thus, we think the new 2013 Hot Lotto game is not as hot as advertised!

Not So

The Changes
First, the number of white balls will increase from 39 to 47 numbers. This means that the chance of winning the jackpot prize will increase from approximately 1 in 11 million to 1 in 29 million. Thus, it will be almost 3 times more difficult to win the top prize.

To offset this increased risk of losing, the guaranteed jackpot minimum will be increased by 1.4 to 1.5 times, depending in which state which the jackpot winners lives.  This is achieved because the federal and state taxes on the jackpot prize will be paid directly by the lottery association. This means the minimum jackpot increase is only a quarter of the increase in the odds. So, when the jackpot value is low, we are not very keen on this new game format.

No longer will the jackpot winner have the choice to taking a single discounted cash prize, or a 25 payment annuity. Instead, all prizes will be paid straight out, as cash.

In the game, players must still choose a Hot Ball number in the range of 1 to 19. This has not changed.

To help make the game more attractive to players, payouts for several prizes will be increased. But, as shown below, only 2 prize levels have increase more than the odds have increased.

Lastly, players will still have the option to purchase the Sizzler option at a cost of $1 more per ticket. The prize payouts to winners with this option will have their prize value multiplied by 3. This does not apply to jackpot winners however.

The tables below summarize and compare 4 aspects of the new Hot Lotto game format to that of the existing game.

Chances of Winning 2013 Hot Lotto
First we will examine the odds of winning and the the number of winning combinations in the new Hot Lotto Game.

Table HL-1
Hot Lotto
Balls
Matched
Odds (Chances) of Winning
White HB Old Format 2013 Format  Change
5 1 10,939,383.00 29,144,841.00 166.4%
5 0 607,743.50 1,619,157.83 166.4%
4 1 64,349.31 138,784.96 115.7%
4 0 3,574.96 7,710.28 115.7%
3 1 1,949.98 3,385.00 73.6%
3 0 108.33 188.06 73.6%
2 1 182.81 253.87 38.9%
2 0 10.16 14.10 38.8%
1 1 47.18 52.08 10.4%
1 0 2.62 2.89 10.3%
0 1 39.31 34.26 -12.8%
0 0 2.18 1.90 -12.8%
- - - - -
Table HL-1 above compares the chances of winning the 2013 Hot Lotto Game with the existing game format. As we can see, the odds of matching 5 white balls increased by 166.4%.

In fact, the odds of matching 1 or more of the balls selected all increased. The only odds that decreased are those that do not match any white balls.
Table HL-2
Hot Lotto
Balls
Matched
Number of Winners
White HB Old Format 2013 Format  Change
5 1 1 1 0.0%
5 0 18 18 0.0%
4 1 170 210 23.5%
4 0 3,060 3,780 23.5%
3 1 5,610 8.610 53.5%
3 0 100,980 154,980 53.5%
2 1 59,840 114,800 91.8%
2 0 1,077,120 2,066,400 91.8%
1 1 231,880 559,650 141.4%
1 0 4,173,840 10,073,700 141.4%
0 1 278,256 850,668 205.7%
0 0 5,008,608 15,312,024 205.7%
10,939,383 29,144,841 166.4%
Table HL-2 shows the number of possible combinations that will occur assuming that all the tickets are sold.

Note that the number of winners that match the 5 white balls with or without the Hot Ball, do not change.




From the above two tables, we can make two observations:
  1. Although the odds of winning either the jackpot or second tier prize increased substantially, the absolute possible of winners in those categories did not change at all. 
  2. The chance of holding a losing ticket combination has increased proportionately more than the increase in total overall odds (205.7% increase in losers verses 166.4% increase in odds).
Thus, from an odds viewpoint, we see that the new format only benefits the MUSL, and not the Hot Lotto players.

New Payouts
Now let's examine the change to the payout structure.

Table HL-3
Hot Lotto
Balls Matched
Winning Prize Payouts
White HB Old Format 2013 Format  Change
5 1 $1,000,000 $1,400,000 40.0%
5 0 $10,000 $30,000 200.0%
4 1 $500 $3,000 500.0%
4 0 $50 $100 100.0%
3 1 $50 $50 0.0%
3 0 $4 $6 50.0%
2 1 $4 $6 50.0%
2 0
1 1 $3 $3 0.0%
1 0
0 1 $2 $2 0.0%
0 0
Table HL-3 above illustrates the changes to the prize payouts for a straight $1 ticket. As we can see, several of the payouts have been increased. However, the amounts for those matching 3 white + HB, 1 white + HB, and HB only remain the same.

Note that we have entered a minimum of $1.4 million for the jackpot. We chose this value because it includes an approximate taxes paid value. This value will change as the jackpot increases.
Table HL-4
Hot Lotto
Balls Matched
Sizzler Payouts
White HB Old Format 2013 Format  Change
5 1 $1,000,000 $1,400,000 40.0%
5 0 $30,000 $90,000 200.0%
4 1 $1,500 $9,000 500.0%
4 0 $150 $300 100.0%
3 1 $150 $150 0.0%
3 0 $12 $18 50.0%
2 1 $12 $18 50.0%
2 0
1 1 $9 $9 0.0%
1 0
0 1 $6 $6 0.0%
0 0
Table HL-4 above illustrates the changes to the prize payouts for the Sizzler option. As we see, all of the payouts (except the jackpot) have been multiplied by 3.

Note that we have entered a minimum of $1.4 million for the jackpot. We chose this value because it includes an approximate taxes paid value. This value will change as the jackpot increases.



Here we see that the prizes that increased the most in value are for those who: match 5 white balls and not the Hot Ball; and match 4 white balls and the Hot Ball.

Wow, these to prizes go from $10,000 to $30,000 and $500 to $3,000 respectively!

But, remember, that there are very few people who will win these prizes. There will still be only 18 possible winners of the $30,000 prize, and only 210 of the $3,000 prize.

What this means is that the MUSL is relying on a players dream to win a larger amount, and hoping that they do not understand that the dream is fruitless.

Think of it this way. The odds of winning the $3,000 Hot Lotto prize is 1 in 138,784.96. But, a person who  plays the Pick 4 game has a 1 in 10,000 chance to win between $2,500 to $3,000. Meaning it is 13 time easier to win the same amount of money.

Conclusion
We find it difficult to rationalize the changes made to the 2013 Hot Lotto Game. We do not believe the minimum jackpot level of $1 million will attract more players. Instead, we find that there will be less winners, 5.81% compared to 6.21%, and there will be many more losers.

Players hoping to win equivalent prize payouts will have better opportunities playing their state's Pick 4 and Pick 6 games.


To learn more, visit our full game analysis at:

2 comments:

  1. Hey JL, looks like "new and exciting changes" is lingo for less payout and worse odds!

    I didn't see a general Contact Us link, so posting here. I'm wondering if you could go over how the changes to Lotto 6/49 (starting next week) will affect the game's odds, and if you could do a compare to Lotto Max, similar to what you did in 2009, I'd really appreciate it.

    ReplyDelete
  2. Keith,

    I plan to provide the analysis, but so far, I haven't found an "official" statement of changes (other than the news announcements). All I've seen is that there will be: the same 6/49 game format; a free ticket for matching 2 of the numbers; and a guaranteed million dollar prize. So, I am waiting until the list of prizes is published.

    That said, I think players who buy tickets consisting only of my Hot Numbers may benefit from the match 2 feature.

    But, I will write a new post as you suggested within a few weeks.

    Thanks for writing.

    JL.....

    ReplyDelete

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The purpose of this blog is to bring you a variety of articles focused on sharing Lottery Specific Topics that will better help you understand your chances of winning the large Mega Millions, Powerball, Lotto 649, Super 7, Euromillions, etc. jackpots.

We intend to post new articles on a Bimonthly (every 2 month) basis, but may add content more frequently. Examples of topics that we will address include: Do all combinations have an equal probability of winning?; Where does the money go?; What combinations occur most frequently and why? Should I take a lump sum payment or annuity?; and more.

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