“Daddy needs a new pair of shoes!” you hear the homeless man in front of you exclaim as he digs his final few dollars from his torn up, dirty, holey sneakers.
“Why don’t you use that money to buy new shoes instead of a lottery ticket?” you ask.
His long, ratty hair slaps you in the face as he whips around. He looks you up and down quizzically before smiling slightly, turning back to the gas station attendant and exploding in laughter.
Taken aback a bit, you stare blankly at the back of his head until he turns it around again. This time, a sly smile creeps over his face. He gives you a wink while placing his dirty homeless hand across your shoulder.
He begins to talk, using over-exaggerated gestures and taking every opportunity to show off his two teeth. “I guess you’re not a very number-smart kind of person,” he says. “Or else you’d know that it makes much more sense to play the lottery than to buy shoes.”
He pauses, watching for your reaction while licking his lips as though searching them for more dirt to devour.
“You see, every ticket I buy is worth more than I’m paying for it.” He pauses again, this time for dramatic effect. “It’s all about… pot odds.”
Seeing that you’re enthralled with his explanation (or petrified that he might stab you), he goes on. “Anytime you make an investment, you have to look at what you’re paying versus what you’ll gain from that payment. With some things, that’s easy. If I paid you 50 cents for one dollar, I’d make 50 cents in profit each time we made the transaction.”
One of his teeth tries to wiggle out of his mouth, interrupting the explanation. He catches it and continues. “But sometimes, you don’t know what you’ll get for your investment each time. That’s where pot odds comes in. It’s a way of figuring out how much you can expect to profit or lose on average over a long time period if you were to repeatedly make the same investment.” His voice lowers to a whisper as he moves his mouth to your ear. “That’s pot odds,” he hisses.
He pauses once again and nibbles on your ear briefly. Snapping back into reality, he scans the area for police and carries on with his explanation. “To figure your pot odds, you see, you calculate how much you’ll invest versus how much you’ll make if you win and then compare that to your odds that you’ll win.”
He eyes your ear for another nibble but thinks better of it. “Take this lottery ticket for example. I pay $3 for a ticket and a chance to win $500 million. The odds that I’ll win are 1:150,000,000. Now we multiply the probability that I’ll win by the payout if I do. That comes out to 3 1/3. That means that for every $3 ticket I buy, I’m earning $3.33, an 11% gain on my investment!” He beams with pride beneath his filthy exterior.
“And now you know why it makes more sense to buy a lottery ticket than a pair of shoes,” he concludes after licking the side of your face.
You stroke your chin, considering all that the dirty homeless man has said. “Aren’t the odds actually a bit lower due to taxes and the chance that you may end up splitting the jackpot with another winner?” you ask.
The homeless man sneers at you for a brief moment. He stops mid-sneer, switching his expression from distaste to curiosity. From curiosity, it slowly changes to horror as he realizes you’re right.
From horror, he proceeds to disgust.
“I guess I’ve never been very good with numbers,” he spits out before glaring at you and muttering something about wishing he had a knife handy.