'The DAO' itself as a lottery

[Enoch]

Think I may have posted in a dormant thread lotteries-as-contractors-an-ethical-question earlier

Hi new guy here, glad I searched for lottery before posting

Reading this today https://www.yahoo.com/gma/powerball-jackpot-swells-348-million-wednesdays-drawing-034400219--abc-news-personal-finance.html

and a quick search there after this

http://www.boxingscene.com/casino-gambling/17330.php

I am thinking how about The Dao itself becomes just one massive lottery. Verified funds available right for all to see, a true internet lottery with no constraints whatsoever. If it is accurate that national state or provincial lotteries are reaping 30% 50% or more? returns, why couldn't The Dao do so as well? I think the key would be marketing of course to get players to buy tickets to begin with.

Maybe not the total that The Dao eventually brings in half or a set amount of say 10 million dollars. Or for marketing and enticement purposes the total amount let us say 20 million dollars (with luck). Structured exactly like any national state or provincial lottery anywhere in the world. 1 dollar ticket 6 or 7 number draw, bonus number, second, third fourth prizes etc.

Payment in any crypto currency via coinpayments which converts to ETH, payout ETH or any crypto currency back through coinpayments (if they do that). Once a week or once a month drawings?

I think the point is 1. we have verifiable funds on hand - so it is most definitely not one of those sleazy ponzi lottery things and 2. the seem to be massively lucrative and profitable to governments that run them with seemingly no effort at all.

Costs involved nearly next to nothing, hosting fees and marketing fees.

What do you think. Nothing more than a pure profit generating endeavor for the members of The DAO, no need to get involved with startup businesses and hope they succeed or anything else out of The DAO's control.

I lack the mathematical faculty to crunch numbers alas but checking etherscan

http://etherscan.io/address/0xbb9bc244d798123fde783fcc1c72d3bb8c189413

There are 9334 transactions so for argument's sake let us say there are 9000 individuals in The DAO who need to be paid back each time the lottery takes place. I assume we would have to work the numbers backwards to get the best setup be it 1 dollar a ticket or 2 dollars a ticket to win 5 million or 10 million or the total amount once it is known, to generate 30% or 50% profit.

edit - no need to add of course it is all automated and fail safe for the lottery ticket buyers - buy ticket, spinning the wheel or dropping the balls somehow on Ethereum, payout of winnings to winners automated through smart contracts etc.

[Beez]

I saw it. It's the same problem plaguing current blockchain lotteries though. First of all, the main problem: random numbers are not viable on the blockchain at the moment. This may change in the near future, but at the moment we can't put random numbers on the blockchain, since every node has to verify the same number.

The second problem isn't really a problem so much as thinking on my part. Jackpots come from funds from the ticket sales, that's fine. If it doesn't take off though, we may have losses from the other rewards. Sure, they're statistically a gain for the house, but if we're particularly unlucky or don't have enough in the lottery fund it may not be good at the beginning. Not that I'm against it, I think it could pay out quite nicely. Just thinking things through.

[Enoch]

Thanks for your comment yes indeed marketing would be critical to get the word out and most importantly educating everyone how tamper-proof and fair it all can be. Right now one cannot buy any national or state lottery without verification that you reside there. There are third-third party operations that attempt to circumvent this offering sales of tickets to the main lotteries around the world. Questionable reliability to say the least.

In this case 'The DAO' has no borders or boundaries or oversight or anything really anyone anywhere can purchase a ticket. I was looking through various lotteries around the world and the numbers are really quite obscene. 30 to 50% profits due seem to be expected results across the board. Off the top of my head in Canada in the Province of Ontario with some 13.5 million people, their provincial lottery netted a profit of 2 billion CAD in the the year 2014 to 2015. That is nett profit to the province. I do think though it includes more than just one lottery though i.e. scratch tickets slots etc.

Compared to funding a start up company with whatever the current failure rate is for them today, offering 1 to 5% per annum in return seems quite trivial after reviewing lottery numbers.

How about this as the lottery mechanism itself:

your sending address is your lottery ticket in this case we would have to select one currency only and not operate via a shapeshift or coinpayments. this could be a good thing forcing people to buy ETH

once all the sending address are in they are 'spun' or mixed up for 30 seconds 60 seconds some amount of time and stopped with an indicator pointing to an address; that is the winner, do a second time for the second prize and so forth. Very much like the mechanics of a slot machine.

This is typical wheel spinning and ball dropping against corresponding numbers on a lottery tick prove to difficult or impossible to implement.

But as quite rightly you point out getting word out is the critical key factor to make it all work. I would imagine with say 1 million USD marketing campaign per annum (or more?) with the right marketing company in control this should be achievable.

edit - with apologies to the Province of Ontario, pop. 13 million not 3 million and the link to the informations I have mentioned: http://www.olg.ca/about/economic_benefits/index.jsp

[Kosmatos]

The random number could simply be obtained from the hash of a mined bitcoin block. Can't really cheat those, nor predict them.

[TheDeafMute]

Have you considered talking to www.Oraclize.it? They let you pipe any data from the web into ethereum blockchain, including random numbers if desired.

[jackwinters]

So it turns out that random number generation on the blockchain is a really hard problem but not entirely unsolvable. Block hashes can be gamed by miners so most people are proposing RANDAO style solutions where multiple parties all provide what they claim are random numbers and they are hashed together in some way. This will not be random if 100% of participants collude so you can combat this with a system whereby participants have funds at risk if anyone can predict what their random number is.(see on anti pre-revelation games )

From a business point of view The World Lottery could be expected to do very well and be and an ideal project for the DAO to fund because other than marketing it is pretty much 100% on chain and I imagine significantly cheaper to develop than many other opportunities:

• Put up a bounty for work on secure distributed random number generation.
• Invite contractors or individuals to tender to develop lottery contracts and GUI for DAPP.
• Pay for marketing, press releases, and in the short term possibly give people commission for referals thus crowdsourcing marketing.
• Parameters of the lottery (initial pot, frequency of draw, probability of winning each prize amount, roll over model ...ect) could change by vote and/or automatically to tune the expected profitability, probability of ruin and excitement level.

[Enoch]

Thanks all for the comments and ideas. I like this paper very much http://www2.warwick.ac.uk/fac/soc/economics/staff/academic/walker/ej01.pdf a blue print to make a lottery, I will see if I can perhaps contact the authors in the near future.

An aspect about lotteries in general was brought up the other day which I think can be quite solvable as illustrated below.

We have our input of funds coming in vying for the mega-pot as it were, we are generating 50% nett profit. Not wanting to appear too greedy and wanting to benefit the unfortunate at the same time, we give our charity inside 'The DAO' 10%. Here our output to the recipient charity(ies) can be conducted the same way as a provider for 'The DAO' would be vetted. [ not dissimilar to how the Province of Ontario apportions theirs: http://www.olg.ca/about/economic_benefits/index.jsp ]

But since we really are greedy on the inside of 'The DAO' out of public view, we recoup our 10% by staking an amount from our lottery pool.

[Enoch]

Just leaving this here for later examination: https://www.random.org/ see if it can somehow integrate in all of this.

[TheDeafMute]

seems even higher risk than slock.it and less rewarding

[Enoch]

What does?

[Beez]

Running a lottery, which always gives a huge benefit to the house, is a higher risk than smart locks that will take 5-10 years to really take effect?

[dangerousfood]

That's exactly what I thought too. If the lottery is a pick 3 use the last digit on the last 3 blocks. Hashing is relatively random though you'd have to adjust for statistically anomalous recurring numbers.

[TheDeafMute]

Yes, the legal issues are much more severe with casinos than with smart locks..

[Beez]

Except we're not a casino, and we're in a jurisdiction that isn't very easily regulated. Lotteries already exist here, gambling already exists here, we'd just be doing it starting out with a verifiable pot. And it's certainly not less rewarding, lotteries get significant returns even with just a small cut.

[Beez]

Have we started the design of this yet? Do we have a Github or anything to work on this in? I'd like to help with the design, there's a few things I thought of that would be useful to look after on the blockchain but aren't something that'd stand out for any other code.

[Daoist]

I like the idea. I would imagine though that everyone who knows what Etherium is, knows that playing in a lottery is like throwing your money away we need the masses, with their fiat currency.

The only way to get these masses, is by the merchants. so for example, merchant collects fiat, and at the moment of sale can buy ether and fill a public address with it. The private key will be send to the email address that the buyer provided. This means that the available public addresses cannot be created by the merchant, the DAO should provide these (otherwise merchant has private key, not good).
Also at the moment of sale, the buyers email + public address can be send to the DAO so we can notify the winner, and of course send buyer information and a 'ticket' before the lottery drawing

Apart form the investment to develop the lottery and marketing it, it is virtually risk-free. We of course need to adjust the prize pot to the total of tickets sold, so we never loose.

[TheDeafMute]

Where is "here", Beez? It certainly is outlawed in most forms online or offline in my country the US. if it is here, I'm sure most middle eastern countries ban it too

[mfitze]

What if we thought of tokens as representing citizenship in an online "nation," that was a democracy with its own laws. So long as activities took place in this online space, they would only be under the jurisdiction of the DAO nation. At the interface between the DAO and other nations would be treaties.

Wow, this stuff I'm puffing on is powerful...

[TheDeafMute]

Because the stuff your puffin has blinded you from the fact that this is not a Democracy, this is an Oligarchy. The more money you have invested, the more power you have. Unlike democracy, where One Human Person = One Vote, which is not the case and would involve MUCH more verification and measures to block duplicate entries, and since only about 0.000001% of the population is involved in this, all of your non-crypto friends could easily be used as surrogates to get extra votes.

[mfitze]

According to your analysis, people do not need to be used to get extra voting power (or extra votes), just money. More investment = more voting power. I don't understand why people would need to be used as surrogates in such a system.

I would agree that such a system will tend towards oligarchy (or is already an oligarchy). Of course this makes it similar to many countries: for example, in Testing Theories of American Politics: Elites, Interest Groups, and Average Citizens (http://scholar.princeton.edu/sites/default/files/mgilens/files/gilens_and_page_2014_-testing_theories_of_american_politics.doc.pdf), the authors conclude that "...economic elites and organized groups representing business interests have substantial independent impacts on U.S. government policy, while average citizens and mass-based interest groups have little or no independent influence." It seems that the DAO is set up to run in a similar way.

Anyway, my point was simply to explore the concept that the DAO might consider itself as a "democratic oligarchy" with its own laws that would interface with other nation's laws through treaties.