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Keywords

Numbers game; parimutuel; lottery; gambler behavior

Disciplines

Gaming and Casino Operations Management | Probability

Document Type

Original Research Article

Abstract

When legal numbers games first appeared in the United States, something surprising happened: Payouts were high, then decreased significantly to a steady state, all without any changes to the rules or payout formula.  We resolve this mystery.  Using a formula for the expected payout developed in a companion paper, together with new data sets on how gamblers choose which numbers to bet on, we simulate parimutuel numbers games under varying assumptions about gambler behavior.  Even after combining the observed sales growth with a deliberately large migration from straight wagers toward box and pair wagers, the simulation explains only about half of the decline and leaves the predicted 1983 payout  well above the recorded value. A flattening of bettors’ number preferences can account for the full decline. We conclude that changing number preferences were the principal cause.  We close by quantifying what the decline meant in dollars for gamblers, and what parimutuel game operators should expect when launching similar games.

Funding Sources

No funding was used to support this research.

Competing Interests

The authors report there are no competing interests to declare.

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