The South African lottery is a 52-ball lottery. The odds of picking the winning numbers are slimmer than shady at 1 in 20,358,520. You have considerably more chance of picking the right CENTIMETRE on the road from Johannesburg to Sun City.
Okay so that’s for the jackpot, what about the other prizes?
The prize pool for Lotto is 50%. That means for every R1 in ticket sales, they pay out 50c for prizes. If you play long enough, you will end up losing half your money. This return on spend is the worst in the gambling industry! The other 50% of the Lotto revenues is what is known as the “house edge”.
To give you an idea how ridiculously high the Lotto’s house edge is, compare it to:
What does the Lotto do with the 50% that they make out of each ticket sale? Here’s a graphic showing the breakdown of what the Lotto revenues are allocated to (from https://www.powerball.net/southafrica/distribution-of-revenue)
The National Lottery Distribution Trust Fund (NLDTF) is used to fund charities, sport and recreation, and arts and culture.
The fund is split among these as below:
The charity aspect of the Lotto is often used as a reason for playing. But if you keen on giving to charity, why not earn yourself a tax break at the same time? You can claim back up to 10% of your taxable income from SARS if it has been donated to a registered charity.
As for Powerball and the other Lotto cousins, it’s pretty much the same thing. Powerball is actually worse than Lotto – the chance of picking the winning numbers is 1 in 42,375,200 and the house edge is 52%.
Wealthy Maths blog
Many of us avoid making financial decisions because we worry that we can’t do the maths. Luckily, there are only a few formulas you need to understand to make a good financial choices. This series of articles is dedicated to helping you understand how to do the calculations for yourself. Once you grasp these simple formulas, you can make better financial choices on the fly. This week’s post was written by the original Mr. Wealthy Maths, Stealthy Wealth. To read more of his excellent content, click here.