The numbers racket. Pick 3 lotteries (Example 1) copy the numbers racket, an illegal gambling operation common in the poorer areas of large cities.

States usually justify their lotteries by donating a portion of the proceeds to education.

One version of a numbers racket operation works as follows. You choose any one of the 1000 three-digit numbers 000 to 999 and pay your local numbers runner $1 to enter your bet. Each day, one three-digit number is chosen at random and pays off $600. What is the expected value of a bet on the numbers? Is the numbers racket more or less favorable to gamblers than the Pick 3 game in Example 1?