Saturday, September 5, 2015

When to Play Lotto Max or Lotto 649 Guide - Includes 2015 Lotto Max Changes + 2013 Lotto 649 Changes

Lotto Max or Lotto 649?
(from http://www.chfi.com/contests/win-with-lotto-649-lotto-max/)
The purpose of this post is to provide Canadian Lotto Max and Lotto 649 players with sufficient information to help them decide on which game they should spend their money.  As background, we have firs summarized the most recent changes to both of these games. This is followed by our player recommendation advice.

Lotto Max Modifies the Game
In July 2015, the first format change to Lotto Max was implemented. As changes go, this was very modest because the ticket price, number of balls, and number of prizes remained the same. Only the prize amounts of the top three second tier prizes (5/7, 6/7, and 6/7 + bonus) were lowered.

This was done in order to allow the Lotto Max Jackpot cap to be increased from $50 to $60 million.

No change was made to the MaxMillions feature, which begin to be offered at $50 Million. However, the number of MaxMillion prizes will be at the discretion of the organizers when the Jackpot level is between $50 and $60 million. In this range, they may increase the Jackpot, the number or MaxMillions, or both. Once the jackpot reaches $60 million, it remains fixed and only the number Max Million prizes increase.

Effect of 2015 Lotto Max Changes
From an executive viewpoint, three of the game characteristics remain unchanged.
  • The percent of winners remains at 5.05% 
  • The overall odds stays at 19.8
  • The return sensitivity stays constant at $0.006985.
But, the overall return is decreased to $0.353 (from $0.364), and payout per dollar spent is reduced to $7.00 versus $7.21.

Review of the Lotto 649 Changes in 2013
Since we first published our "When to Play Guide" for Lotto Max and Lotto 649 in 2009, we have not updated it since (although 649 was changed).

In September 2013, four significant changes were made to the Lotto 649 format:
  • First, the ticket price was increased to $3.00 (up from $2.00)
  • Second, the minimum jackpot prize was increased to $5 Million (up from $2.5)
  • Third, a new "Free Ticket" prize was added for those matching only 2 of the 6 main balls (not including the bonus ball).
  • Fourth, a separate $1 Million Guaranteed Prize drawing was added.
While the underlying concept of drawing 6 of 49 balls and one bonus ball remained the same, these changes produced very noticeable results, mainly:
  • The number of winners increased to 15.1% (up from 3.1%),
  • The overall odds dropped to 1 in 6.62 (from 1 in 32.31)
  • The overall return increased slightly to $0.333 per dollar (from $0.318)
  • The return sensitivity flattened to $0.023837 (from $0.035736)
  • And, the payout per dollar spent was cut to an average of $2.20 (from $10.27)

Break-even Jackpot
Using the Overall Returns and Return Sensitivities of the latest 2015 Lotto Max and the 2015 Lotto 649 games, we have calculated the break-even jackpot to be $4.15381 Million.

As shown above, the break-even amount is below both the minimum $5.0 Million Lotto 649 jackpot and the $10.0 Million Lotto Max minimum jackpot. Thus, for any level where the jackpots of both Lotto 649 and Lotto Max are equal, one should always purchase the Lotto 649 game because the return is higher.

However, we rarely have the situation when the jackpot offerings of both games is the same. This is because the Lotto Max minimum is $10.0 Million, and it increases by a minimum of $5.0 million, whereas the Lotto 649 minimum is only $5.0 and typically increases by just $2.0 to $5.0 million.

The "When to Play" Guide
Therefore, we need to view a cross-jackpot matrix to identify the various levels where it is more beneficial to play one game versus the other. Using the return information from the above graph, we have constructed a "When to Buy" graph showing the break-even Lotto 649 jackpots for Lotto Max jackpots ranging from $10.0 million to $100.0 million

Choosing the Game to Play - Our Advice
Based on the above, we see 10 vertical bars. The horizontal spacing indicates the Lotto Max jackpots labeled 10M to 100M. Immediately below them are the corresponding Lotto 649 break-even jackpots.

For example, we see that if the Lotto Max jackpot is $10 million, we should purchase this game whenever Lotto 649 is below $5.87 million. But, if the Lotto 649 jackpot is higher ($7M for instance), we should then buy Lotto 649.

Similarly, when Lotto Max is $50 Million, we should buy that game unless Lotto 649 is above $17.59 million.

Note that once Lotto Max reaches $50 Million, we must consider the total jackpot offering to determine the return., This is the total of both the advertised jackpot amount plus the total number of Max Millions. This is why we can consider Lotto Max jackpots from $50 to $100 Million.  For example, if the Lotto Max jackpot was $60 million plus 20 Max Millions, we would use the total of $80 million as the Lotto Max value when reading the graph above.

Lastly, to evaluate jackpot levels not displayed, one should simply use the values shown above and interpolate.

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