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Professor David Forrest is based in the University of Liverpool’s Management School:
For the first time since the introduction of the National Lottery in 1994, the organiser, Camelot, is to change the format of its lead draw game, Lotto.
Up to now, players have had to choose 6 numbers from 49 and must match all six numbers correctly to win a share in the jackpot (typically these days a few million pounds). From this Autumn, they will face a new game format, still based on choosing six numbers but now from 1-59 instead of 1-49. With this new matrix, the chance of winning a share of the jackpot becomes much less. Instead of the probability being about 1 in 14 million as it is now, the chance will be about 1 in 45 million instead.
Long term decline
It is not surprising that Camelot wants to refresh the game. Like many lottery agencies around the World, it has seen long term decline in this core product, Lotto, though it has been very effective in replacing lost sales by growing the markets for Euromillions and scratchcards (where sales have been strong enough to yield record amounts of money handed over to the Good Causes).
Is making the game harder to win a plausible way of revitalising the Wednesday/ Saturday Lotto game? The case in favour is plausible enough. When the odds are long, the jackpot is seldom won. If sales stay where they are now, one might expect that 80-90 of the 104 draws each year will fail to deliver a winner.
Thus one might expect long sequences of rollovers with seriously big jackpots emerging, creating what economists call a ‘lotto frenzy’ with very big sales. My econometric research on Euromillions sales show that the UK market is more sensitive than that in other European countries to the headline figure of the expected size of jackpot. So in this market, Camelot’s strategy might succeed.
On the other hand, the change is a gamble by Camelot because there is a risk that the public will become disillusioned with a game which is so hard to win that sometimes weeks will pass by without a jackpot winner.
Some players may hold back at the start of a sequence because the jackpot is not yet big enough to justify placing £2 on a 45 million-to-one-chance- so sales and the jackpot may rise only slowly as the sequence of games without a winner goes on.
Wednesday draws are especially vulnerable because fewer tickets are sold than for Saturdays and, at such long odds, they would be expected seldom to produce a winner- a game where there is hardly ever a winner may go into a downward spiral of sales.
Camelot will of course be well aware of these risks. Its re-launch of the game will therefore feature some changes designed to keep their customers buying. Every draw will now feature the bonus of a raffle with a guaranteed £1m winner; and, at the other end of the prize range, there is a payoff for the first time to getting just two numbers right (a free ticket for the next draw).
Whether these measures will make the re-launch successful remains to be seen. But, from the University perspective, there is an unambiguous gain: changes in the environment provide an opportunity for our ongoing research into lottery markets to gain extra insights into the behaviour of players from observing how they react to a new prize structure.
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