Deep Thoughts Archives - Lazy Man and Money

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

March 20, 2014 by Lazy Man 3 Comments

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.

Forget Money…

February 14, 2014 by Lazy Man 4 Comments

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.

What Fantasy Football and Personal Finance have in Common

November 16, 2010 by Lazy Man 7 Comments

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.

When you Sue a School, Does Anyone Win?

February 22, 2010 by Lazy Man 21 Comments

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.

Why I Don’t Buy Digital Media

November 19, 2009 by Lazy Man 14 Comments

[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.