Can someone explain to me how the EV can be so incredibly low? I know the answer is because people will buy the tickets no matter what, but even compared to other losing games the lottery comes away looking like an absolute bandit.
A run on the simulation (n=1000000) comes back with -92% EV. It looks like -10% [1] is a rough estimate for slot machine EV, which I would ballpark into the same game genre (-EV, no skill entertainment) as the lottery.
What accounts for this payout discrepancy in what I would consider similar games? On that train of thought, what prevents a new lottery from coming in and offering a _generous_ -50% lottery, offering ~5x as much money as before?
Because you shouldn't use the simulator to calculate the EV, or said differently your n=1000000 is too small.
Assuming you used the first lottery example (Mega Millions), the EV is easy to calculate directly and is -$0.66/ticket, ie -33%
The jackpot is a whole $1 of that EV! Without it, the EV is -$1.75/ticket, ie -87%, which is closer to what you got in the simulation.
And also lacking a bit in details:
- both technical (e.g. how are you dealing with upgrades or multi-data center fallback for your postgresql), and
- especially business, e.g. what's the total cost analysis including the supplemental labor cost to set this up but mostly to maintain it.
Maybe if you shared your scripts and your full cost analysis, that would be quite interesting.