ryanm -
A pari-mutuel lottery payout system is only good if you're the person running it or taxing it. P-M takes all the risk out of a lottery and puts all the liability on the bettor. In a P-M lottery system the State cannot lose.
If you've ever been to a horse race and placed a bet, you've participated in a pari-mutuel gambling system. But, in any such system, the circumstances are different. You'd have trainers, jockeys and other employees to pay, animals to feed, and owners looking at the bottom line. Then there are the taxes and a profit margin for the track taken out of the betting pool. And tracks are private property, privately operated, and can charge admission fees. But a knowledgeable bettor can still profit in a pari-mutuel racing atmosphere by reading, absorbing and correctly interpreting as much information as possible - racing forms, newspapers, inside journals, all the tools available. The best can make a living from it.
But you can't do that in a lottery. Unless you're a proponent of that theory, past performances mean nothing. There are no training exercises and times to report. There are no newspaper columnists publicizing an upcoming lottery. No one in the newspapers will predict the outcome of a lottery, as they will in the more important horse races. And the state's cut of the lottery is a whole lot larger than their tax rate at the tracks. I'm willing to state that there are very few people earning any sort of income playing the lottery as is possible by playing the horses or dogs - unless you're selling lottery systems.
But I've gone off topic. California's pari-mutuel lottery payouts were mandated to transfer all of the risks associated with the lottery to the bettors. Period. The powers that be have decreed that a certain percentage of the take (gross) will be regarded as taxes and will be spent on educational projects, a certain amount will be targeted for administrative expenses of all kinds, and the remainder (a hard percentage, take note) will be expended as prizes. Even free tickets can be and are considered part of the prize pool and percentage. Even the Pick 3 in CA pays out on a pari-mutuel basis. Heck, CA doesn't care how many Pick 3 777 Straight tickets people purchase - if it hits they're still not going to pay the betting pool any more than the law allows. And if so many tickets were purchased that it means paying each bettor $10.00 for a $1.00 bet on a 777 Straight win then that's all that bettors are going to get.
And it's not just confined to California. Any state with a game that regularly pays out on a pari-mutuel basis takes no risk. Any state with a game that can revert to a pari-mutuel payout system under certain conditions is transferring a larger share of the risk to the bettors and keeping a larger share of the overall betting pool for itself when and if those conditions occur.
As you probably can deduce, I'm not a real fam of lottery pari-mutuel systems.....
gl
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