Guaranteed, jackpot and carried-over: three promises that sound alike and are not

§1Three different promises

Pools are advertised with words that sound interchangeable and describe genuinely different arrangements. Keeping them apart is most of what it takes to read a pool's offer.

Each of the three is a statement about the pot. None of them is a statement about the price of a ticket, and none of them changes the arithmetic of the dividend that a winning combination receives.

§2What a guaranteed pool guarantees

A guaranteed pool commits the operator to a minimum gross amount. If the public money falls short of that figure, the operator contributes the difference, and the pool is administered as though the minimum had been staked. What the guarantee does not do is change the take, change the conditions, or promise that any particular ticket will receive anything.

The effect is easiest to see against a pool that missed its guarantee. Both cases below pay a winning combination that carried 300 units, both carry an illustrative 25 per cent take, and only the size of the pot differs.

The guarantee is genuinely worth something to a winning ticket in an under-subscribed pool, and it is worth nothing at all to a losing one — which is most tickets in most pools. That is the honest framing: a guaranteed pool changes the size of the prize, not the chance of being paid it, and a bettor who reads it as a reduction of risk has read the promise wrongly.

§3Jackpot pools and the concentration rule

A jackpot pool pays the pot to the ticket or tickets that meet a stated condition — commonly getting every leg of a multi-leg pool right. Everything about the pool follows from that condition being hard to meet, and from what the rules say about ties.

If the rules pay the whole pot to a single ticket and two tickets qualify, there is a problem to solve; if the rules split the pot between qualifying tickets, then the dividend depends on how many other people got it right. In the second case a bettor is exposed to two unknowns at once: the size of the pool and the number of winning tickets it will be divided among. The number of winners is not knowable when staking, and it is often not knowable until settlement.

This is where a jackpot differs in kind from a win pool. In a win pool the effect of other bettors is spread across the whole distribution of the pool. In a jackpot pool, the outcome hinges on a single binary fact — whether anybody else also holds the winning combination — and the money at stake is large relative to the pool.

§4Carryovers: money that has already been through the take

When a pool has no winning ticket, the rules normally allow the prize money to be carried into a later round. The arithmetic of what happens next depends on a question that is easy to overlook and worth a great deal: is the take charged on the new money only, or on the whole advertised pot?

Below, an illustrative round has 12,000 of new money, an illustrative 28 per cent take, and 40,000 carried forward. Two conventions give dividends that differ by more than eleven thousand units.

Which convention applies is a matter for the rules, and it is exactly the kind of detail that decides whether an advertised carryover is worth what it appears to be worth. The general point is that a carryover is not free money appearing from nowhere: it is money from an earlier round, already reduced by that round's take, and it may or may not be reduced again depending on when the take is applied.

§5Must-be-paid-out rounds

Some pools have rules requiring that the accumulated money be paid out by a stated date or in a stated round, rather than rolling forward indefinitely. On those rounds the pool is obliged to find a winner, which usually means a fallback condition — paying a consolation to the best partial ticket, or paying the highest tier that was reached.

The consequence is that a must-pay round can produce dividends that look anomalous compared with ordinary rounds, because the money has to leave the pool by rule rather than by a ticket being correct. Consolation rules, where they exist, change the arithmetic of a ticket as well: a ticket that loses the whole pot may still collect something, which alters what the ticket is worth and therefore what it costs to hold one.

As with everything else on this page, the terms are the operator's and the regulator's. The mechanism is what this page tries to make legible, so that those terms can be read with the right questions in hand.

§6How to read a guaranteed-pool headline

An advertised figure for a pool is a claim about money, and it can be checked against a short list of questions. The list below is not a staking method; it is the set of things that have to be true before the headline means anything.

• What is guaranteed, exactly? The gross pool, the net pool, a minimum dividend, or nothing at all — the headline often names the largest of these.
• What is the take, and on which pool type? The figure has to be read alongside the percentage removed before any dividend is paid.
• Is the take charged on carried-over money? This can move the paid amount by a large fraction of the advertised total.
• What happens if several tickets win? Split, paid to the first, or paid by some other rule — the answer changes the value of a ticket before the event.
• Do consolations exist? A partial payout rule changes what a losing ticket is worth and therefore what holding one costs.
• What is the condition, and how many legs? The number of legs is the number of ways for a ticket to die, and multi-leg pools are the ones with carryovers.
• Where are the rules published? If the terms cannot be found before staking, the headline cannot be checked before staking either.