Thursday, September 29, 2011

The Health Lottery

If I used the definition that a lottery is a tax on the poor it would seem that someone else has designs on that small, but widespread purse.

Cue the launch of the Health Lottery by Richard Desmond publisher of such edifying newspapers as the Daily Express and Daily Star, television channels such as Channel 5 and Red Hot TV. Despite the name it's not affiliated with any health related associations, but it can always provide some money to them. Some being the operative word.

With the current National Lottery of the standard £1 fee 50p goes into the prize fund, 28p to "good causes"; 12p to the Government in tax; 5p to the retailers selling the tickets; and 5p to the operator themselves.

The health Lottery which is operating under a society licence meaning that it is established

  • for charitable purposes;
  • for the purpose of enabling participation in, or of supporting, sport, athletics or a cultural activity, or
  • for any other non-commercial purpose other than that of private gain.
However is it a Small or Large Society Lottery. If it makes more than £20k or sells tickets worth over £250k it's Large. In theory this means that despite what the Telegraph states it's under no lawful obligation to donate a minimum percentage of its takings as that's only a requisite of the Small. However if it does apply the minimum is 20% or 20p of the £1. According to its own site
20p in every £1 goes to support local health related good causes
That would be the minimum then and 8p less than the National Lottery. So why would any one want to either sell or buy these tickets?

Let's look at the odds of winning. In this I have to match the fewer winning combinations from the Health Lottery with the National Lottery. That means you win with 3, 4 or 5 numbers.

National Lottery Lotto pick 6 numbers 1-49
Health Lottery pick 5 numbers 1-50

Work the maths

NumbersNational Health

5£1,500up to £100k

For 3 matches you're roughly four times less likely to win, but will get five times as much. For 4 matches you're roughly nine times less likely to win, but would get eight times as much. For 5 matches you're roughly 39 times less likely to win, but could get "up to" 66 times as much.

To run the figures. From various figures I'll say 30 million play the lotto each week and buy three tickets. With two draws a week that's 45 million tickets. Let's assume this Health Lottery doesn't do as well and say a nice round figure of 20 million tickets per draw or £20 million worth.

Using the probability figures we can average 93,458 three match winners; 2,124 four match winners and 9 five match winners. Total maximum prize fund of £6,634,900. The retailers get 5% per £1 ticket and 1% of the winnings. That's £1 million  plus £66,349. "Good Causes" get 20p per ticket that's £4 million and let's assume the government takes the same cut in tax of 12p per ticket; that's £2.4 million.

Add all that up and it totals to £14,101,249 leaving £5,898,751 pounds to account for expenditure or 29.5p per ticket compared to the 5p per ticket of the National Lottery.

Gosh they're not very efficient are they?