The Truth Behind FOOLottery: April Fool's!

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FOOLottery!®

By Tom Gardner and David Gardner

Dear Fellow Fools,

The beginning of spring always delights us at Fool Headquarters. The chill winds ease, our nation's capital is alive with cherry blossoms, the country gears up for baseball (relatively steroid-free, this year)... and we get to devise a Foolish prank to loose upon the world on the first day of April.

We hope you enjoyed this year's lottery stunt. Happy April Fool's Day!

As you might imagine, we at The Motley Fool believe April 1 is our national holiday (unclaimed as it is). It's a day when we try to fulfill our mission of educating, amusing, and enriching you, but with a triple helping of amusement! We don't run our jokes to embarrass people. (Well, that's certainly not the primary aim.) Instead, we hope to teach key concepts about personal finance, investing, and life -- wrapping the medicine of learning in the sugary flavor of a playful hoax.

The lottery, roasted
This year, we trained our sights on the lottery system run by 40 state governments. We don't mind saying that we find the system absurd. Every day of the year, the loudest message you'll hear from your elected state officials goes something like this: "You can't win if you don't play."

Lottery ads are, sadly, targeted most aggressively at people lacking the financial education to know how many daily tickets are too many. Less than one-quarter of the population buys nearly three-quarters of all the tickets. It says something that when curbs or halts have been placed on lottery advertising, ticket sales have dropped off dramatically.

For us at The Motley Fool, an organization with a mission of helping everyone make better financial decisions, one lottery ticket a day is too many. Therefore, the 25 tickets that some of our fellow citizens are buying each day is, we think, a high-order financial catastrophe. Players get hammered by a 50% loss of capital on every ticket, every day of the year. The net result for 99.99% of the players is mounting losses, which can demolish hopes of a comfortable financial life. For context, here's some simple math: A 50% payback rate will turn $20 million wagered daily in the state lottery into fewer than two cents within 30 days.

If you're interested in this subject, we highly recommend the excellent book Selling Hope: State Lotteries in America, by Charles Clotfelter and Philip Cook.

FOOLottery! unplugged
But April 1 isn't about soapbox preaching. Our goal is to have some fun by climbing atop apple crates and idly telling the people of Internetville about our latest creation. This year, we had our fun by rolling out a game we called FOOLottery! (A reminder again, folks: Everything we're writing about in the next few paragraphs is completely fictional!)

FOOLottery! was a worldwide, multihundred-million-dollar game organized to compete with state-run lotteries in the United States. Rather than a 50% ratio, our members would be treated to a 110% payout ratio, on average earning them rewards on each wager. As people went to get their online tickets, enthusiastic about the rules of our (1) Play Now, Pay Later" program, (2) money-back guarantee, and (3) free-ticket plan for referrals (the "BUDDIBonus"), our opportunities for operational profit evaporated.

The threat of heavy losses for The Motley Fool began to mount.

A supposed FBI investigation ensued, followed by pointed criticism from two semi-fictional lottery proponents -- the Union of State Lottery Workers & Homeroom Educators, and the State Lottery Council lobbying group. These events made our task more difficult. But the real trouble started around 3 p.m., when your two founders began pleading with members to stop buying tickets. We were already down somewhere between $5 million to $25 million, so we turned to the only people who could help us. You.

We asked you to please, stop playing.

You kept playing.

The theory goes that you don't really test a person's integrity until you test his or her ability to deal with failure. Our April Fool's Day "failure" tested our mettle, and the result was evidence of serious character flaws. We Gardner brothers jury-rigged a 4 p.m. drawing, manufacturing a controversial final ball. ("It's an O; no, it's a zero; I don't know which!") A harsh, but fair, journalist of our own creation at the nonexistent Washington Gazette lit us up for running an unprofessional, unethical, and likely illegal lottery. Then our joke concluded with no one winning the lottery and a grainy black-and-white photo of the two of us high-fiving each other on the way out.

We -- The House -- had hornswoggled the planet, taking home $125 million.

Would anyone fall for this nonsense?
Fair question.

As we and our production team (led here at Fool HQ by Dayana Yochim, David Forrest, and Jeb Bishop, with great last-minute help from humorist Todd Etter -- thanks, Fools!) put the finishing touches on our joke in the final days of March, we gave it even odds. We were trying to make our prank believable, yet so preposterously flawed that it might just fool a few of you.

FOOLottery was launched at 3 a.m. on April 1, and within the first few minutes, it looked like we might fail. We opened an email from a veteran Fool member, who wrote simply:

Are people actually falling for this? I mean, c'mon! It is April FOOL's Day! Some of those rules and conditions are pretty funny!

Not long afterwards, this note from another member came through:

Oh, please! You guys have been playing these April Fool gags over the last five years now. Do you honestly think that we're this naive?

What followed throughout the day, though, as the final 4 p.m. drawing approached, warmed our hearts. The emails flooded in, 600 in all. And almost half were written by people who'd fallen for our joke. It looked like we'd successfully played on the human tendency to crave short-term gain and then agonize when the opportunity dries up.

For the first of many bits of evidence supporting our claims of success, we submit this note sent to us, colorfully titled "Watch Sesame Street for the Episode on the Letter 'O'." It read:

Dear FOOLS!

And I do mean that literally, if what I just read was true. I somehow missed everything to do with the FOOLottery except for the news of your great stupidity. How can I ever trust you to give me ANY advice about anything ever again? Even preschoolers know the difference between a zero and the letter O. How you could fail to recognize the outrageously glaring ambiguity when you were writing on the balls and not make them different in some way is unfathomable! Morons!

At The Motley Fool, we are not practitioners of the timelessly cruel art of schadenfreude (taking pleasure in the pain of others); therefore, you won't read the full name of anyone who penned us a note complaining about our FOOLottery! game. However, as far as the messages, we do have some doozies to share, as well as notes from members who picked up on our intent right away.

They who fell for the prank
Throughout the day, we were inundated with notes from players trying to print up their numbers and letters and an animal, trying to claim their BUDDIBonus tickets, trying to figure out just how Play Now, Pay Later" worked, and trying to decipher how much they'd have to pay per ticket.

What follows is a collection of actual letters we received from people around the world.

  1. I'm appalled at your new concept. You are promising 110% return, which is literally impossible, unless you are planning to lose money, which you are assuredly not. Now, maybe there is some hidden explanation, but there is no way to know that on your website. You guys are quickly losing credibility with me.

  2. I never received my BUDDIBonus tickets. What a ripoff!

  3. My name is..., I currently work for the GTECH Corporation in Rhode Island as the Principal... in the Lottery Projects group. That is GTECH, as in the World Leader in Lottery Technology; maybe you have heard of the company? Perhaps you could call on someone with experience next time. What you attempted was reasonable; how you attempted your task was more like how you ask all of us Fools "NOT" to act when coming to investments (the word "amateur" comes to mind). Nice try, very lucky outcome, and with legislation governing wagering over the Internet, I would expect you will hear about this for a long time. I have no doubt you will find your way out of the hole you just dug, and I hope most of your subscribers are like me, with a good sense of humor and respect for all you have done. You are not the first, and certainly not the last.

  4. Two questions: (1) What kind of lottery solicits "play now, pay later" without stipulating the cost to play... now or later? (2) Where are my BUDDIBonus tickets?

  5. (These two notes came from the same person, within an hour of each other.)

    I thought your aim was to become wealthy as you "educate, enrich, and amuse" the rest of us. What lesson are you trying to teach us here? That "greed conquers all"? Or is it that "gambling is good"? This whole episode conflicts with everything else we've been learning from you -- and smacks of pure, mercenary greed.

    (This is what followed half an hour later.)

    Oh, man! April Fool's? I walked right into that one. Boy, do I feel stupid now. I guess I should look at a calendar now and then. Good one. I take back everything I said. My respect has now gone up. (A fickle thing, aren't I?) Well, now, I'd better buy those newsletters right away.

  6. In response to your fool lottery, I can't believe you would risk your brand image with such a ridiculous stunt. It is obvious that you never meant to actually award a large payout, but merely used the idea to entice millions of fools, including myself, to give you email addresses which you will use for viral marketing. Though I had considered subscribing to one of your services or newsletters on fool.com in the past, I can say now that won't happen. This stunt shows that your company is inept at the very least, and at most corrupt and fraudulent. Not what one looks for in a financial services company.

  7. Well, I think the Gardners broke one of their cardinal rules. Don't get into something you know nothing about. Nuff said.

  8. Good job; you certainly tricked me. I didn't realize it until I saw the picture that was supposedly taken 40 minutes after the drawing, but I saw the picture only 20 minutes after. This was pretty distracting to me at work, but it's all in fun. Thanks for the laugh, guys.

  9. I know that my first ticket was free, but in none of the articles or announcements does it state what the charges or methods for future purchases of this type exist. Also, since you're not controlled by U.S. lottery laws, wouldn't it make sense to be even more forthright with the financial structure of the lottery than what is required by law in the U.S., for instance? That would be in keeping with the Foolishly high standards we've come to expect from Tom and Dave.

  10. Without a doubt, one of the best April Fool's jokes I've ever been suckered by!

  11. (A thoughtful Fool at Harvard wrote the following.)

    Very interesting concept, but I found there to be too little information on your website. For example, I was unable to find out the price of the tickets. What are the methods available to pay? How is this legal? I thought only states were allowed to run lotteries. Is this run offshore? The laws of what country govern this drawing? Your terms were cute, what with reference to the "king of the lottery," but they lack some basic info...

  12. Stick to the business of stocks, or I will be canceling my subscriptions. I'm not paying for you guys to waste your time running lotteries. This whole thing is ridiculous. Pick your business... stocks or lottery games. The next lottery or other foolish (NO capital F there!) venture I see... and I'm outta there. One less subscriber you will not have to worry about billing again!

  13. I would be interested in seeing the "extensive legal work" involved with your new lottery. I am especially interested in why you consider this game legal. P.S. My latest book (on the subject of gaming and law) was just published.

  14. As always, it sounded too good to be true, and it was! I cannot believe that you guys would intentionally defraud others. I think you are the ones who were FOOLED into believing this scheme could work. I sincerely hope that your company can survive this mess.

  15. I couldn't believe it when I read about the incredibly unprofessional manner in which the lottery drawing was held. Hand-drawn characters on Ping-Pong balls? Can't tell the difference between an oh and a zero? Are you kidding? I thought you guys were different, but I now believe that I was wrong about you. There's no difference between you and the Enron insiders and other folks who have tried to bilk clients and consumers for big money. You have completely lost my trust over this lottery scheme. I am shocked that you sunk so low. I have canceled both subscriptions, effective immediately. I'll get my advice elsewhere from now on, thank you. You should be ashamed of yourselves, Gardners.

  16. I hope this is a joke!!!! If this is for real, I will never buy another advisory service letter. Please tell me this is a joke. I have enjoyed your site, service, and one of your advisory services for years. I think I just lost all my faith in you.

  17. Since it's April 1, I thought this was a joke. I'm still not convinced it isn't. Since it seems like you've spent quite a bit of time and money on this, however, I'm leaning more toward taking this seriously. Not that I mind you guys getting rich off this lottery; it seems a bit cheesy and pedestrian. Nevertheless, good luck to ya!

Indeed, we probably should say it once again: This was all a joke! Let's check in with the Fools who caught us in the act of a prank.

They who got the joke

  1. You guys are the best. Thanks. I always fall for it a little bit, but being someone who reads the rules before I click did it for me. Thanks for the fun effort.

  2. One of the greatest April Fool's Day jokes I have seen in a long time.

  3. I hope my selection of letters does not weigh against me: "GARDNR dodo."

  4. You guys rock. It's amazing how quickly I responded to this, and it really taught me a lesson about my nature to try to "get rich quick." I'm the non-Foolish fool today!

  5. I love the idea of the Fool-Lotto. It opens up so many more options as well: FOOL-Slotto -- online slot machines, FOOL-Jack -- play blackjack with other fools! Play now, pay later! There are endless possibilities. I can't wait to link my credit card information to your website so that my online lotto tickets can be automatically deducted from my account. I bet I won't even notice!

  6. (This next one warms the heart, as it is good to be reminded of the many smart Fools in this world.)

    I am a 17-year-old college-bound student who was extremely excited, two days ago, when I heard I could participate in your FOOLottery (being under 21, I am not otherwise allowed to gamble). I was even more enthused when I discovered that I would not have to purchase my tickets! An online message board posted free vouchers available to participants who had bought in bulk, and 20 free tickets were made available to me.

    When the final balls were selected by the Fools, I waited with bated breath. My animal-alphanumeric matched! I had the donkey on one of my free digi-tickets. But I still didn't think I had a hope of taking the victory. Next came the 1. I had it! Followed by P, 5, A, and, eventually, R. I couldn't believe that I had come so far, and on my first time playing! I was afraid to breathe -- in fact, afraid to even move. I realized at that moment that my life could be changed forever. Would I buy a boat? Too cliche. A house? A mansion? A dozen mansions? My mind was racing. But my chances of winning were still 1 in 50 (26 letters, 10 numbers and 14 animal-alphanumerics). The world slowed down around me, I heard each beat of my heart, loud and distinct and subtle, each heave of each ragged intake of breath racked through my entire body. And then the last number was selected. It was mine! The prize! I had the last zero! And then the brothers looked confused, picked it up, and examined it. It was unclear whether it was a zero or an "oh," they claimed.

    At first I was shocked, then angry. But now I'd like to thank the Fool brothers. They've saved my life. With all of that money, I wouldn't have gone to college. I'd have bought a lot of nice things, sure, and a lot of friends, but none of it would have been real. I'd never get a true feeling of accomplishment ever again in my life, as it would have all been about luck.

    I've refused all the class action lawyers who have called me. Don't worry: I will emphatically NOT be pressing charges. I'd like to thank you for giving me my life back!

  7. My first idea is to use the Social Security model with your lottery. First, allow only a certain number of tickets to be sold each week. The following week, allow an additional 10%-15% of tickets to be sold. The additional ticket sales will allow you to pay the previous week's winner until such time you can't sell enough tickets in a week to cover your prior obligations. This could last for years.

  8. APR 1 05 DONKEY. I knew you Fools would be up to something on April Fool's Day! What's with "donkey"? You're an "ass" if you play the lottery? OK, agreed. Fool on!

  9. April Fool's Day is a wonderful day. I just hope that your lottery payout is as big as the dollars you spent on this email and Web development. Thanks for keeping me amused!

  10. Someone put in a huge effort for this April Fool's prank, but it was worth it. Love your work!!

The lessons we've learned
A good April Fool's Day here at Fool.com should be like a fine, flaky chocolate mousse cake: rich and many-layered. We go all out, and we have for 12 years straight. We spend hours dreaming the project up, put hours more into designing it, writing it, software-coding it, laying it out on the Web, and on and on. As you've seen above, we even lose customers as a result of doing our joke. Some people get fooled, and outraged, and cancel their business with us... and even though we write up and in some cases mail out this explanation, they never actually figure out it was a joke! Years later, some still believe we really did try to IPO a company called eMeringue, or that we really intended to launch a personals service called love.fool.com... yet that, too, is part of the many layers and the richness. We put in these hours, even lose that business, because what is gained is far more valuable than what is lost.

What is gained are some great lessons, and we're not always the ones teaching, either. For instance, what great lessons in human nature, good and bad, were taught in the notes cited above! Below are a few others. From us:

Lesson No. 1: Lotteries suck.
Pardon our French, but that's the most obvious lesson from our April Fool's Day joke of 2005. The impetus of this year's joke was our long-held and extreme disdain for this wonderful "investment," brought to you by most of the state governments across our fair land. State lotteries are a racket, and they're really quite an embarrassment for those who run them. They work really hard through expensive advertising every day to entice large numbers of ignorant and, in some cases, desperate people to fork over some of their savings to a racket that skims 50% off the top. That old ironic saw about how "we're from the government and we're here to help you" comes to mind. Here to help, eh? What it comes down to is this: Lots of us out there are having our tax burden borne on the shoulders of some relatively destitute people ahead of us in line at the 7-Eleven. "Gotta play to win," huh? Proud of that?

Lesson No. 2: We're a bunch of Fools.
Before you take us for imperious judges sitting in condemnation of our fellow Americans, we hasten right away to remind you that we are merely Fools. We are not judges. We have opinions, of course. But we will generally make our points with jokes. Fools have been advisors to the court for a thousand years. They have no aspirations to power. They just offer truthful counsel with a friendly face and are quick to make a joke, hoping to brighten your day. Yes, we've testified before Congress numerous times in the past on topics of interest to the individual investor. Invite us back for the lottery -- we'd love to talk lotto! But remember that in the end we're only testifying to the power of Fools, and we know it.

Lesson No. 3: The stock market gives you 10% -- there's your 110%.
We had a lot of fun conceiving of this lottery to end all lotteries, one that "would give 110 percent!" As we think all our Fools know by now, the reality is that lotteries pay only 50% back out. It's a bear market every day for state lottery players -- a market crash, actually. A 50% decline in the value of your assets is horrendous, especially on a daily basis. By contrast, it is the stock market that gives you 110%. The historical annual return of the stock market is PLUS-10 percent, annually. Some years it loses money, of course, so there are no annual guarantees. But average it out over time, and there's your annual 110%. So, instead of lottery tickets, buy shares in good public companies that give you ownership in something less fanciful than a fleeting one-in-a-million dream. Wanna make a million? Really? Have more slow fun (slow fun is always more fun) doing it our way.

Lesson No. 4: OK, it's April 1, OK? Remember?
The Motley Fool does April Fool's jokes on April Fool's Day. Every year. Without fail. We know this lesson may be obvious, but the reality is that if thousands of people didn't forget this every year, our joke wouldn't work.

Lesson No. 5: The two-thirds majority.
We've been able to look over the inflow of thousands and thousands of customer notes reacting to our April Fool's jokes for more than a decade now. And so we can now authoritatively say that every year, about two-thirds of you get it, and one-third is fooled. This is generally good news, by the way, for our republic. No wonder we've kept this democratic-like experiment going for 229 years. If the ratios were reversed... eeesh.

* * *

In closing, we are quite sure we will remember for years and years the joke of 2005, the year we created a fictional lottery (we, a lottery?!) that:

  • goes against all our principles.
  • featured a "play now, pay later" system, a "technology" we developed.
  • gave you a 100% money-back guarantee if you "weren't satisfied."
  • used "animal-alphanumerics," where you were selecting an ANIMAL in addition to your numbers and letters.
  • had us, with supposedly $100+ million at stake, scrawling handwritten numbers on used Ping-Pong balls for the grand drawing.
  • never actually specified how much anyone's tickets cost!
  • etc., etc., etc.

And what egg on our faces we had when we couldn't tell whether that Ping-Pong ball we drew showed an "oh" or a zero!

And we grin once again as we put the finishing touches on this article of reflection, and that short list above, and as we think once more on this joke, now concluded, and its effects, which probably never will totally conclude.

It is hoped that all of the above brings a smile once again to many a Foolish face, whether fooled or not. For that is the spirit.

Fool on!

The Gardners

Miss our April Fool's prank? Or do you want to enjoy all our funny Foolish pictures and prose again? Start here, with our concluding piece on the aftermath of FOOLottery. You can also share your thoughts on our FOOLottery discussion board.