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Millionaire Life - is it a good buy?
Updated February 11, 2008
The Millionaire Life raffle type lottery game was offered across Canada in February of 2007. The game is available for sale again this year. The following is an analysis of whether or not it is a good buy. For those that want to skip the explanation and go straight to the answer, the answer is a resounding NO, it is not a good buy.
The following are the game highlights as per the OLG website:
- $5 for one selection, $10 for three selections, $20 for seven selections.
- One top prize of $1 million a year for 25 years or $17 million cash
- Four prizes of $1 million.
- 20 prizes of $100,000
- 16 Early Bird prizes of $100,000. Tickets eligible for Early Bird must be purchased by midnight on February 16, 2008.
- $1,000 for matching the first six digits of the top prize winning number drawn.
- $20 for matching the last two digits of the top prize winning number drawn.
- All prizes guaranteed to be won.
- Overall odds of winning any prize are approximately 1 in 100. Actual odds of winning top prize(s) are based on the total number of Millionaire Life selections sold.
- Sold across Canada.
Raffle type games are different than normal lottery type games. With a raffle game, all available prizes are awarded. A draw computer is used to select winning tickets from the pool of tickets sold. With a ball drop type lottery game, the jackpot prize (and sometimes, the second place prize) may not be awarded if no tickets match the winning numbers.
Whether or not a raffle game is considered a good buy is entirely dependent upon the number of tickets sold for the game. If sales are low, then the raffle tickets are a good buy. If sales are high, then the game is a poor buy.
The conclusion that this game is not a good buy is based upon the actual sales figures from last year's game. There is no reason to believe that this year's sales figures will vary substantially from last year.
Last year a total of 24,010,944 selections were sold and a total of 13,720,197 of those qualified for the early bird prizes. Based on those sales figures, the following were last year's expected values for each of the price points. The expected value is the amount of money returned in prizes as a percentage of money spent.
- If 7 selections were bought for $20, then the expected value was 44%.
- If 3 selections were bought for $10, then the expected value was 38%.
- If 1 selection was bought for $5, then the expected value was 25%.
Clearly, buying only 1 selection for $5 gives a terrible expected value. But even buying the $20 option still does not give a reasonable expected value. Most lotteries average an expected value of around 50%. When the Lotto 649 and Super 7 jackpots get over $20 million, the expected value ranges around 70% and sometimes exceeds 80%.
The calculations and recommendation are based on sales from last year. There is a possibility that sales this year may be lower than last year. On the other hand, sales may be higher than last year giving even poorer returns. A factor that may affect sales is other large jackpots to compete with the $17 million Millionaire Life grand prize. Last year, during the month of February, there were no jackpots larger than $17 million. The Lotto 649 jackpot reached $8 million only once. The Super 7 jackpot reached $10 million and $12 million during February.
If you still want to buy a ticket, one strategy you can use is to wait until the end of month and see how sales are doing. This means you are forfeiting your chance to win an early bird prize. Last year, the early bird prizes contributed about 4 percentage points to the 44% expected value of the $20 ticket.
How low do sales have to be to make this game a good buy? Let's say you want an expected value target of 70%. The sales have to be around 14 million selections with 9 million early bird selections. To hit an expected value target of 80% sales have to be 12 million selections. That represents a 50% drop in sales from last year. That is not going to happen.
Another thing to consider. What is the maximum number of Millionaire Life selections that can be sold? It is an astounding 100 million selections. Compare that to the Millionaire Raffle game that was held in Ontario in December of last year. There was a maximum of 500,000 tickets available and close to 480,000 tickets were sold. If all 100 million Millionaire Life selections are sold (extremely unlikely), then the expected values range from 16% for a $20 ticket to 9% for a $5 ticket.
In conclusion, this game is not a good buy. Hold on to your money and wait for large Lotto 649 or Super 7 jackpots.
Changes for 2008 Version
There was one minor change made to the 2008 version of the game. Before revealing what the change was, it is worth looking at the game from the lottery companies point of view. The expected value analysis as outlined above was from the buyer's perspective. The perspective that is important to the lottery companies is how profitable was last year's game.
Sales totaled $75,521,145. A total of $29,226,200 was given out in prizes - that is 39% of sales. In a typical lottery game, approximately 50% of sales is allocated to prizes. About 17% of sales is used to cover expenses leaving about 33% of sales as profit. In the case of Millionaire Life, an additional $8 million of profit was made mainly because sales of the game were so high. Now, it could have gone the other way. If sales were low, the profit margin may have been well below the normal amount and in fact, there was the chance that the game could have lost them money.
Now given the profits were much higher than average, it will come as a surprise how they changed the game for this year. Two early bird prizes were added. Last year there were 14 early bird prizes of $100,000 each and this year there are 16 early bird prizes. That is a total of $200,000 of additional prizes. Not very much given how profitable the game was last year.
This is another indication that the game is not very favorable for the players.