A high school band booster club is selling 1000 raffle tickets for $1 each. The winner will be drawn randomly and will win $500. What is your expected gain if you purchased one ticket?

Question

campbell_st · Answer

Well isn't it

E = 500 x 1/1000 - $1    

$1 is the cost of playing

anonymous · Answer

One in 1000 chance you will win $500. So, your expected gain is $0.50. Of course, you are paying $1 for it. So, you actually are expected to lose $0.50 on this purchase.