The ticket price for the government lottery Lotto 6/49 in Canada has gone through two changes. The price increased from \(\$1\) to \(\$2\) (Canadian dollars) per ticket in 2004, then increased to \(\$3\) in 2013. The rules of the game also changed with the price increases. The average sales revenue increased slightly, while the number of tickets sold decreased substantially. Using the implicit utility theory developed by Erwin Diewert and the extension to lotteries developed by others, this paper estimates the effects of ticket price changes on consumer welfare. Payout prizes of 1,983 draws were collected from Lottery Canada, while data on average household characteristics were collected from Statistics Canada. A byproduct of the estimation is a true cost-of-living index for the game. The results show that there were substantial decreases in consumer welfare and increases in the real price. While the changes in ticket prices increased revenue for the Lottery Corporation, implications suggest reverting to the \(\$1\) ticket price regime.
