What’s the Difference between a Promotion and a Lottery?

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A few months ago, a friend pointed me to this news story about a Seattle car dealership, Jet Chevrolet, having to pay out money for a promotion it ran. The promotion was that if the Seattle Seahawks shut out the NY Giants, they'd give away $420,000 to 12 people ($35,000 each). I'm not sure where they came up with the $35,000 number, but I'm guessing the picked the 12 for Seattle's famous 12th man, another term for the fans.

Life does crazy things sometimes. This time, it caused havoc for the car dealership as the Seahawks actually did shut out the Giants. One of the owners said, "This is crazy. We never expected that we'd actually be giving away the money." My response would be, then don't offer it and advertise it everywhere.

Fortunately for the dealership, they bought insurance for $7,000. They were paying $7,000 anyway, so this is almost a best case scenario since it got them so much extra publicity. Sure that insurance company is going to raise the insurance premiums on the car dealership, but I hope they'll never run a promotion like this again they ran it again with increased premiums, but didn't have to pay up again.

Before I get to the main point of the article, I'll share one other oddity that my friend, Kosmo, spotted:

Reached Sunday night, Johnson said he still doesn't know how the dealership will actually work the drawing and was waiting on guidance from the insurance company.

"We're a car dealership, we're not used to doing something like this," Johnson said.

His email to me nailed exactly what I was thinking:

Uh, what? You paid the insurance company $7000 to insure against a shutout. Once they give you a check for $420K, their job is done. If they are smart, they don’t touch the drawing with a ten foot pole – that’s just begging for a lawsuit.

Ahhh the drawing. Let me tell you about those details. The company worked with their legal department (kudos to them) and realized that they had to make the opportunity available to everyone. It's for the same reason you always hear the "no purchase necessary." If you charge people money for a chance to win a big jackpot you are essentially running a lottery, which is only legal for the government I guess. Similarly, in many states 50/50 raffles are illegal... and in some they have extensive restrictions.

Jet Chevrolet made the opportunity available to the public. You could enter the drawing without buying a car (I presume by going to the dealership and filling out an entry.) If you bought a car during the promotion, you got 100 entries. It turns out that 12 people filled out a form who didn't buy cars and 20 people bought cars. Thus there should have been 2012 entries in the "hat" when the 12 names were picked.

There's some information on the winners here, but I couldn't tell if they were the ones who bought cars.

Clearly the odds are greatly, greatly (it bears repeating) in favor for those who bought cars, right? Jet Chevrolet made up their own terms for the promotion and they had their legal team involved, so of course everything is on the level, right?

I'm not going to comment on the specific representation of their promotion. They said that they ran it by their lawyers and it was legal. However, I was thinking about extrapolating it as an example for myself. Let's imagine that I create a one-page ebook with just average content... nothing special about it at all. I sell it for $10 and offer a prize of $100 where people who buy the book get a million entries and other people can enter once for free. While it is technically open to the public, it is essentially a contest where the only reasonable chance to win is to buy my book.

Suddenly it looks a lot like running a lottery, right? Running a lottery is illegal in most states (perhaps all of them).

At what point does running a "promotion" become running a lottery? I don't have the answer, so I'll just end with that question.

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Last updated on March 20, 2014.

Forget Money…

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It seems like everyday I come to this space to write something related to money (which should surprise you due to the blog name). Today, I'd like to tell you to forget about money. We'll have a lot of other days to deal with money. Plus if you are reading this, you are likely pretty responsible with your money anyway.

It's okay to be irresponsible sometimes. One of the best times to be irresponsible is Valentine's Day. So while I may write about dozens of ways to save money on Valentine’s Day, I must admit that today can be like one of those cheat days on your diet.

Consider this to be a reminder that money is (typically) most valuable when it is spent. (Having it also valuable from a piece of mind perspective.)

Take the day to tell someone you love them. Hey if Bill Belichick is going to say he loves you, it should be easy, right?

I've already spent too many words on money for this article about not about money. With that in mind, I'm quit while I'm behind.

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Posted on February 14, 2014.

What Fantasy Football and Personal Finance have in Common

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This year I finally gave in to the pressure and decided to play fantasy football. In the past, I've skipped it because I never wanted to get in a situation where I'd have to choose between rooting for my favorite team and rooting for my fantasy team. I would like to say something magical resolved the issue. I wanted to find out what all the hubub was about and the pressure finally got to me. In hindsight, it was a great learning experience... and I'm not talking about learning about football X's and O's. In the end, I learned a bunch of lessons that can be applied to personal finance:

  • I was unjustly over-confident - Another reason why I wanted to play is that I thought I could win... easily. My co-workers never seemed to talk about football. I knew this stuff. Sometimes I think I know a player, team, stock or industry, but it turns out that...
  • ...I didn't account for uncertainty - Picking football players is a lot like picking individual stocks. Sometimes there are winners who don't seem to perform as you'd expect (Tom Brady's fantasy football numbers until Sunday Night's game) and sometimes you things play out just like you thought (Aaron Hernandez' rise from obscurity to being a great value at tight end). Even if you feel you have a great team, a number of unexpected factors can sideswipe you.
  • I wasn't diversified - You may have noticed from the previous point that I mentioned two Patriots players. To avoid having to root against my favorite, I drafted nearly an entire team of Patriots players. I have QB Tom Brady, WR Wes Welker, TE Aaron Hernandez, TE Rob Gronkowski, and K Stephen Gostkowski. If the Patriots don't have a good day, I'm practically sunk that week. Plus with the Patriots, you never know who is going the target that week. Hernandez has lead the team in receptions and only 10% of the leagues in CBS Sports had him drafted. Randy Moss and Wes Welker were drafted at the top. This past week Gronkowski got all the playing time as Hernandez sat. Gostkowski got injured for the season, so I had to pick up another kicker.
    • While I can't related it to personal finance, I've learned that football isn't at all like fantasy football. In the world of fantasy football, my backup Kyle Orton is better than Tom Brady because he can pick up a bunch of garbage time statistics. Maurice Jones-Drew, one of the top picks, almost had to bench himself in his fantasy league because he got off to a slow start. Brandon Marshall, one of the most talented players in the game, has been a bust as he gets all the attention from opposing defenses. Stephen Jackson, one of the best runners in the game, has been pretty good, but not his usual self.

      What is the result of my "superior team"? I have a 2-8 record. In fantasy football you control how many points you score, not how much your opponent scores. In a 12 team league I have scored more points than 6 teams, yet I have the worst record. The team with the 3rd best record has scored fewer points than me.

      I think my fantasy football experiment is going to be a one-time only thing.

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      Posted on November 16, 2010.

When you Sue a School, Does Anyone Win?

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If you've been following the news lately, you may have come across a story where a Pennsylvania school system has been allegedly spying on their students. The Rosemont's Harriton High School's computers included software that would allow them to turn on the webcam whenever they wanted. This would effectively allow them to spy on students in the privacy of their own home. This came to light when the school allegedly informed student Blake Robbins' parents that he had been selling drugs and even showed a still photograph as evidence. The Robbins' family claims these accusations are false. You can read more details here or watch this video:


CNET noted that the school system could be sued for violating a number of laws/regulations such as, "the Fourth Amendment, the Electronic Communication Privacy Act, the Computer Fraud Abuse Act, the Stored Communications Act, Section 1983 of the Civil Rights Act, the Pennsylvania Wiretapping and Electronic Surveillance Act, and Pennsylvania common law." They didn't even get into the potential child pornography charges that could potentially come from the girl who said that she shower with her laptop open to listen to music (if they are shown to have violated that).

I find the story interesting on many levels. Having a Computer Science degree and working in the technology industry for the past decade, I usually stay on top of technology happenings. It never occurred to me that a web cam could be used in a nefarious way like this. Take it a step further and imagine a virus that does the same thing. Yikes!

The biggest question for me from a financial perspective is, "What if the school is found guilty of all these violations?" The damages could be millions and spread across numerous families. On the outset it would seem that justice would be served and everyone could just move on. However, the community would be left with a bankrupt school system. That typically means raised taxes. So others in the town would have to pick up the pieces. This leads me to think, the ones who "win" could be the lawyers. It might even be in the community's best interest to root for the school as outlandish as it sounds.

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Posted on February 22, 2010.

Why I Don’t Buy Digital Media

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[Caution, I'm going to get on my soapbox for this post. If you are not interested in soapboxes, I suggest you avert your eyes]

Yesterday, I touched on the Legality of IPodMeister's digitizer service. Bringing up the First-Sale doctrine opened up a can of worms in my mind.

I love digital media, but I won't pay for it (or steal it obviously). I have never purchased a song from the iTunes Store. For too many years, all the songs were looked up so that they'd only play on certain Apple products. There were workarounds, but they were less than convenient for this Lazy Man. The iTunes Store is heading in the right direction making it so their songs do play everywhere (or so I've read). You could burn a CD of the songs you bought on iTunes and then rip that to MP3. There was some software that was a little more direct, but it just seemed to be a gamble. If I could spent money and get something without restrictions, why spend money and get restrictions? It's no problem to sell a CD to someone, but have you ever tried to sell a song you purchased on iTunes? Good luck with that.

I like the idea of the Amazon Kindle. I was very close to saying that I love it. After all it's a nice way to carry pile of books with you while traveling. However, when I looked at the Kindle in depth, I saw too many drawbacks. People aren't likely to steal a book at the beach if you go for a swim. If I like a book, I can't lend it to a friend. And like the iTunes Store, you can't sell the books you bought to others.

Amazon gets around this by stating in their End User Licensing Agreement (EULA), that you aren't really buying the book, but the rights to read it. You can read more here. Okay, I can play ball with that restriction, but you need to give me something else in return... like a much cheaper price. Of course as CNET's Rick Broda points out you often don't save much money on eBooks. You would expect a lot of savings considering that eBooks eliminate the need for: Paper, ink, shipping (gasoline, trucks, and drivers), warehouse storage, shelf space, sales staff, etc. but that's not the case. When you give up the rights to sell the book it's looking like a worse deal.

I don't want to pretend that there are no advantages to eBooks. There are features like search and digital annotation in addition to the aforementioned portability that are quite nice. In the end though, I think it comes up to be a wash or regular paper books having the advantage. This disappoints me, because I think we should be making moving forward with innovation and eBooks could be a large part of that - except that arbitrary restrictions hold them back.

It's that right of first sale that I don't understand. It would be technically easy for Amazon (and others) to implement one of two things

  • Credit an Owner's Account a Percentage for Deletion of the eBook - In this scenario, you are essentially selling the book back to Amazon. Why would Amazon buy the book back? Simply because they know you A) are more likely to buy a book in the first place knowing that you can sell it back and B) will use the credit to buy more books hence making them more sales.
  • Allow People to Sell their eBooks - It's easy to transfer the "Amazon license" from one account to another. In fact, Barnes and Noble's new Kindle competitor, the Nook allows you to lend eBooks to others, as long as you only do it once per book for a maximum of 14 days. It is a baby step in the right direction.

Some say that publishers don't want this digital media transferable because it's simply too easy and would cut into sales. People might just buy the first hundred thousand copies while the cheap guys (like myself) wait for them to finish and then buy them for the lowest price. I don't know why publishers fear this so much because that already happens. You can buy used books on Amazon. You can use PaperBackSwap.com to get books for free. And then there is that library system.

The Best Digital Media Solution

The RIAA should maintain some kind of huge database that notes the digital rights that everyone has. As long as you paid for the rights, you can get the music in any form you wish for a nominal free (downloading for free, a mix CD for a buck or two, etc.). Sure it's a privacy nightmare. However, I think consumers would buy into it. There are a lot of consumers out there who are fed up after buying Aerosmith's Toys in the Attic in 5 times (vinyl, 8-track, cassette, CD, iTunes). The RIAA says that a lot of the cost is paying the people producing the album, but if you paid those people with your vinyl purchase, why do you have to pay them again for the cassette version? If my CD gets scratched, it should be replaceable for the cost of the CD as all the parties are already properly compensated. If Toys in the Attic gets remastered or if we are talking movies with DVD extras, it's fair to charge the consumer a bit more to upgrade their license. However, the consumer should get the choice to keep the license for the previous work which they've paid for.

This solution would work for all digital media. If I bought a book on a Kindle and later decide that the Nook is a better device, whatever organization that binds book publishers should transfer over that license for easy downloading.

It's inevitable that we get there, it's just going to take time for media publishers and owners to realize that this is the fair way to make sure that everyone gets compensated fairly.

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Posted on November 19, 2009.

What if History Doesn’t Repeat Itself?

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Back in 2006, I had a revelation. I was a software engineer and I made decent money. However, there was a lot of talk about off-shoring all kinds of software projects. I looked into it and with companies like Elance, I realized that there could be a major shift coming sooner than I thought. I looked at into my heart and it didn't take long to realize that software engineering didn't interest me enough to motivate me to be the expert I would have to become to justify my salary. That's why I started this site. I needed to find other ways to supplement my income for the day when I would transition out of software engineering. That day happened in October, 2007 and I haven't looked back. If I could talk to my old manager again, I'd give him a great big hug, say thanks, and ask if he'd do one more impression of the old child molester on Family Guy or sing a Kelly Clarkson song.

What does this have to do with history? The world is changing - extremely fast. Detroit used to be a thriving hotbed of wealth. Now it needs bailouts just to keep afloat for another few months. At last 2007's American Pharmacists Association, a distinguished speaker said that companies were exploring outsourcing clinical pharmacy studies oversea. Shoot the data over the Internet, have a pharmacist there analyze it and shoot the results back. It's that simple and a lot cheaper. At some level, either Americans have to start providing more value (how?) or one of two things is going to happen: American wages will drop or other countries' wages will rise. I imagine it will meet somewhere in the middle.

This has me thinking... for years financial advisers and Money magazine have repeated the 8-10% historic rate of return on stocks. Can we trust this history? What were the factors that contributed to that history? When I was growing up, I remember seeing things that said, Made in USA. I don't know if I've read that phrase in the last ten years. Might that impact the historical rate of return of US stocks? I think it might.

I often read the historical rates of return on real estate. It's had a big run and it seemed that around 2004 everyone was living by the "it always it goes up" credo. Well today we've learned that it's not entirely true. Perhaps the reason real estate jumped up over the 30 years is due to women getting more lucrative jobs and families finding themselves with more money. If people have more money, they can bid up the price of homes. If that theory is right, the blast of extra income was a one-time event. In the end, real estate prices have to track wages or people will be forced to stop buying.

What I take from this is that you should believe the popular mutual fund disclosure: past performance is no guarantee of future results. I'd take it a step further and say that past performance might not even be a good indicator of future results. Does that mean you should stop investing? I think you should look for opportunities in this changing world. If you think that television is going to go Internet via sites like Hulu and YouTube, perhaps a investing in Internet infrastructure is a good move (Cisco comes to mind). If you think that we are going to be slow to adopt solar technology, perhaps you should invest in oil. If you think that solar technology is going to be big in ten years (a point I wouldn't argue), perhaps you could invest in Claymore/MAC Global Solar Index or Market Vectors Solar Energy.

Does this mean that everyone in the United States is doomed? No. Now is the time to be proactive and think about the future of your field and your career. It's time to take a few minutes and not think about what's for dinner tonight, but what your long term plan is (unless you are already nearing retirement. In that case just carry on :-).

A final thought, this month's Money magazine points out that Japan has been in a bear market for 19 years - very much a whole generation. I wonder what the Japanese version of Money magazine says about historic rates of return.

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Posted on December 18, 2008.

Five Thoughts To My Future Children…

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I got the latest edition of Money Magazine yesterday, and Pat Regnier in his The Bottom Line column used the letter to his children as a literary device. It's not unique (I've even written a letter to my high school self in the past), but nonetheless, I thought the idea was worth stealing flattering Mr. Regnier with my own letter to my own children. [Note: I probably wouldn't use bullets and bolding in a real letter to my children, but I think you'll find it easier to read.]

Dear Xetra and Dax,

  • Your Names - Sorry about the names. They seemed cool at the time. I didn't think your mom would take my bet. Even so, Matt Cassel himself didn't expect to win the Super Bowl.
  • Your Education - I've seen a lot of specialists make a lot of money. I was a specialist myself - one of a dozen or so people in the United States who could program a computer in a very propietary computer language. However, like me, a lot of specialists lose their jobs when that specialty goes away and have nothing to fall back on. There's something to said about doing one thing and doing it well, but there's also a lot to be said for networking well, writing well, speaking well, and knowing technology well. There are a lot of other valuable skills as well, but that's a fine start.
  • Your Time - It's the most valuable commodity you have. Right now, you probably view it as an infinite resource. It gets more finite with each passing minute. Look for ways to do something well once instead of having to do repetitive work. Many mistake your Dad as Lazy, but it's more about being efficient with your time.
  • Your Money - If you haven't learned it by reading Dad's website by now, money is important. It buys you freedom from doing things that you don't want to do. It buys you freedom to do the things that you do want to do. It also buys you the ability to help friends and family in time of trouble.
  • Your Happiness - I don't have it quite perfected yet, but I've been working on a recipe for this. Beyond that, I've found four factors of focus: family, friends, freedoms, and fitness.
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Posted on November 13, 2008.

Money Does Buy Happiness… Imagine that!

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It's long been assumed that money doesn't buy happiness. There was a famous study in the 70s (PDF) that supported this claim. It concluded that as long as your basic needs are met, money doesn't buy happiness - it's money relative to the people around you. If you don't believe the study, what about the anecdotal evidence of lottery winners reporting that they are less happier after winning? When I think about it, some of the happiest people I know aren't particularly rich, but have good friends, family, and hobbies that they enjoy.

New York Times published an article yesterday saying that maybe everything has changed, money does buy happiness after all. In my opinion, this is the defining statistic:

In the United States, about 90 percent of people in households making at least $250,000 a year called themselves "very happy" in a recent Gallup Poll. In households with income below $30,000, only 42 percent of people gave that answer.

I think you have to look at money as a way to buy various freedoms. If you win the lottery, you might not need a day job, which gives you a lot of freedom. However, you now have cousin Nick asking you to help him out of his credit card problem. You trade one stress for another. If you are a CEO of a big company, you have plenty of money. But then you have to deal with all the responsibility that comes with it. If a friend comes up with great tickets to the big game, you often have to say no and get back to work.

I think it's very difficult to find that happiness balance. Having money (and not the responsibility that comes with it) seems like a way to reduce those obstacles to a very happy life.

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Last updated on June 14, 2008.

Responses to “Is Software Development Slowly Killing Me?”

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I got a lot of intelligent responses my question of "Is software development slowly killing me?" I thought I'd like to cover a couple as a weekend bonus. Since it's a borderline personal finance topic, it may be worth skipping if you are not into that kind of thing.

One of the best responses was from Programmer who said:

Have you tried learning a new or growing technology? Go where the demand is, become an expert, and work as a consultant to maximize your earnings... The best paid people aren't the code monkeys, but the ones who learn new tech. on their own, love what they do, and as a result have excellent skills because they're passionate about their tech... But, if you're lazy, then you're probably not worth a premium consulting rate anyway. Right?

My points:

  • I have consulted and at $150+/hr. Unfortunately, I was skilled in a rare technology that no longer has the demand or potential to earn that. I'm not sure consulting is the answer for everyone as Programmer implied to be.
  • I have gone where demand is (Silicon Valley), learned new technology (for me that was Java), but I have not become an "expert" or a consultant (yet). I didn't get to mentioning it, but one of the conversations I had with the friend was how Java (which is where the demand is nowadays) is extremely slow to get an application up and going. Someone in my last company had the equivalent of 200 lines of code to simulate a light bulbs state: on or off. That is not something to be passionate doing or something that motivates me to become an expert. It's something that motivates me to create a website that can me money in way other than programming and leave it to brilliant people in third world countries who will do it for much less than myself.
  • As far as being lazy, my name is a reference to many articles about lazy programmers being the best kind of programmers: see this article and this one.

Here are some statements that I found myself nodding in agreement with...
Used Vans Girl said, "I think the problem isn't programming its monotony." Brip Blap echoed that with "Anything you do as a routine becomes dull."
East Side Food Geek said, "It sounds to me like software development ISN'T killing you, but rather the jobs you've had.... In any case, your side business gives you some freedom to be picky, to rebuild your personal brand and reenter the marketplace on your own terms." This comment was dead on and a reason why I started to look to side business. And I've found that as I start to look in the workplace, I can be extremely picky.
Ryuko mentioned "coding would not be a viable job, especially since more and more of them are being outsourced." I agree with that. AskDong said, "I often feel the same way. I'm burnt out, and often feel i'm letting my coworkers down. It really is a terrible feeling to want to do more but somehow not being able to muster it." Yep, I couldn't agree more with that.

And the one thing that I found wasn't true IN MY EXPERIENCE (I might need to just be in different places) as a Senior Software Engineer...
Kitty said, "One shouldn't confuse a software engineer with an application programmer, though, as some posters above seemed to do. Software engineering is not about coding, it is about system architecture, design, algorithms, problem-solving, ability to learn new technologies, creativity. Programming is the most trivial part of the job."
It should be that way, but I've found that companies often already have architecture and technologies in place and just need to extend it. That reduces the amount of design, creativity, and even algorithms that I could use. It left me with only programming. Often times I was doing very repetitive cut and pasting. This leads me to believe that it was more the job than anything else.

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Last updated on July 25, 2011.

Emptying the Recycle Bin of Mind

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Some things that have been going through my mind lately...

Blogging

  • I wonder how readers will react to a whole post of random thoughts. Perhaps they'll let me know with a comments.
  • I have about 18 design changes and features that I'd like to implement on Lazy Man and Money - if I had the time.
  • I should write a whole lot more for Lazy Man and Health. It has so much potential, but my time management just isn't where it needs to be.

Finances

  • I've been at my job for a year now. I expected to get some kind of recognition, but thus far there's been nothing. I expected at least an inflation-level raise considering how hot the software engineer market is in Silicon Valley.
  • My current job has two of the best perks I've heard of... free lunch and dinner, and a monthly cash bonus for living close to the office.
  • Google contacted me about working for them this week. Things just got interesting.
  • I inherited $131 from a very distant relative who I've never met. Who says life isn't like Monopoly?

Life

  • We've been thinking about getting a dog. I'm thinking it might be a good Christmas present to ourselves. I should read Free Money Finance about pet costs.
  • Speaking of pets, Brip Blap indirectly reminded me how much I want a Sony Aibo. I'll keep an eye out for an exceptional bargain on one - and then I'll probably pass on it.
  • My mother-in-law sent my wife a list of baby names this week. I guess that's a not so subtle hint that she wants to be a grandmother.
  • My wife and I are having an extremely difficult time figuring out where in the United States we should live. There are so many thoughts going through each of our minds that I could blog about it all next week - and I just might.

Boston Sports

  • Red Sox pulled out a strong first game of the playoffs. The Yankees lost big. Life is good.
  • My wife is going to the game in Anaheim on Sunday. If the Red Sox win today, I'm sending a broom with her.
  • The Patriots continue to break records. There's too much talk of going undefeated. It's good to know that they eat humble pie. They still have won 21 games in a row before so maybe going undefeated isn't impossible.
  • Sunday is a huge day in Boston sports with a playoff baseball game and a football game. It would be nice to diversify the game on a couple of days. If things go bad, I could be catatonic on Sunday night.

Entertainment

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Posted on October 5, 2007.

 
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