Will the arrival of the Year of the Dragon bring good luck? The millions of people who buy lottery tickets every day in China will certainly be hoping so, especially after seeing others strike it rich.

On Feb. 6, a 28-year-old man from the southwestern Guizhou province won a record 680 million yuan ($94.45 million) playing the Double Color Ball, a game run by the China Welfare Lottery. He’d purchased the same winning numbers 133 times for the final draw in the Year of the Rabbit.

However, as opposed to traditional weekly and daily draws, young Chinese people are increasingly opting for instant lottery games in the form of scratch-off tickets, which pay out on the spot. Among the most popular are the China Sports Lottery’s Total Quack and the China Welfare Lottery’s Scratch-Offs.

According to the Ministry of Finance, lottery ticket sales in China reached 526.41 billion yuan from January to November last year, up by 45% year on year. Sales of scratch-off tickets accounted for 108.8 billion yuan, with instant games registering the fastest growth compared with the other major types of lottery in China: scheduled draws, prediction games, Keno, and video lotteries.

With the price of scratch-off tickets ranging from 5 to 50 yuan, players can potentially win big money for just a modest outlay. However, the chances of hitting the jackpot are exceptionally slim.

Against the odds

To understand the odds in instant lottery games, let’s look at Loong 30, which was launched in January. These scratch-off tickets cost 30 yuan and come with the opportunity of winning one of nine prize amounts, although the vast majority pay nothing. In every batch of 20 million tickets, 25% pay 30 yuan and 4% pay 50 yuan. With just four tickets worth 1 million yuan, the probability of winning the jackpot is one in 5 million.

Other products may differ in design but operate on the same principle, with most players lucky to earn the cost of the ticket back.

Despite the narrow odds, the popularity of scratch-off tickets has continued to rise as people chase the instant gratification that comes with winning money on the spot — even small sums. In reality, however, the probability of scratching off that silver panel only to see “no win” is more than 60%.

More than half of the total prize money paid out last year by instant games run by the China Welfare Lottery was distributed through tickets that gave players only their money back. For example, 70% of the Bafanglaicai scratch-offs pay 10 yuan, equal to the price of a ticket.

However, this quick return can naturally encourage players to reinvest their winnings in the pursuit of bigger prizes. Stories abound of people winning hundreds or even thousands of yuan only to spend it immediately on more scratch-offs and ultimately lose it all.

In mathematical terms, instant lottery games typically exhibit a negative expected value, representing the average amount a player can theoretically expect to lose over a large number of tickets purchased, factoring in the probabilities of winning various prizes.

For example, calculations show that the expected value of the China Welfare Lottery’s instant game Golden Key is minus 7, indicating that on average 7 yuan is lost from the total prize fund every time a ticket is scratched. This means that if a player continues to buy tickets with their winnings, the end result is a guaranteed loss. The expected value of the Loong 30 game is minus 11.

The low win rate and negative expected value of Chinese lottery games could be a result of the 65% return rate, which is the proportion of sales revenue that’s awarded as prize money. According to a notice from the Ministry of Finance, the rest goes toward public welfare funding (20%) and administration costs (15%).

Public welfare funding is mainly used to finance social projects in areas such as health care, sport and recreation, innovation, entrepreneurship education, and child services. In 2022, instant lottery games generated 11.88 billion yuan in public welfare funds, official data shows.

So, win or lose, instant lottery players are playing their part in China’s efforts to improve public welfare and build an equitable society.

Reported by Jin Yu.

A version of this article originally appeared in The Paper. It has been translated and edited for brevity and clarity, and is republished here with permission.

Translator: Chen Yue; graphic designers: Jin Yu and Luo Yahan; editors: Xue Ni and Hao Qibao.

(Header image: A consumer holds a scratch-off ticket in Yangzhou, Jiangsu province, Feb. 10, 2024. VCG)