$1B+ Powerball Jackpot - Did You Buy Your Ticket?

[lowtek]

I figured it was kind of impossible to work out the odds of that happening though, I guess you could find data on how many tickets are usually sold when the jackpots this high

I would calculate the EV as a function of the probability of someone else winning and then see where the cutoff is for net positive EV. I'd then plug in some assumptions about how many other people are playing and average tickets / person and see if it sounded reasonable.

You probably can't get an exact answer, but you can get a range of values to get a reasonable idea of whether or not you could play.

 

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[PizzaOnTheRoof]

No thanks, I'll take the 80% chance of creating a life of freedom and wealth with the Fastlane

 

[garyfritz]

No thanks, I'll take the 80% chance of creating a life of freedom and wealth with the Fastlane

Now that's an interesting claim! I'm sure the FL chances are waaayyy higher than winning the lotto, but 80%? Where did you get that number?

 

[PizzaOnTheRoof]

Now that's an interesting claim! I'm sure the FL chances are waaayyy higher than winning the lotto, but 80%? Where did you get that number?

Honestly, I just pulled it out of my a$$, BUT I know for sure that the frameworks outlined in TMF and Unscripted , followed diligently and thoughtfully, will probably give you SOME positive result.

Much more than going into business blind, or opening an NY pizza shop in downtown Chicago.

I have a more generous definition of entrepreneurship. You can still be an entrepreneur and design a lifestyle of freedom without breaking into new industries or reinventing the wheel.

 

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[Nick M.]

If you're the sole winner of $1.6 billion, there would be a $904 million cash payout.

The odds of winning is 1 in 302,575,350. One ticket is $2.

When you win, you win $904 million. When you lose one ticket, you lose $2.

EV is ($904,000,000 * .0000000033) + (-2 * .9999999966) = $2.9832 - 1.9999 = $.9832 or $.98.

I don't remember what yesterday's payout was, but I believe it was somewhere in the range of $506 million. Based on the EV, yesterday's drawing would have been a negative EV draw. Next weeks will actually put you in the positive territory if you're going to play the EV side of it - and assuming you are the sole winner. In fact, if my math is right, your EV goes up as you buy more tickets.

You're still not likely to win (OMG SOMEONE HAS TO WIN, THOUGH!), but EV says it might be worth a shot this time.

**If my math is wrong, please correct me.**

As far as I can tell, your math looks right.

However, there is one factor that you (and many other people) missed: the number of people playing. As the jackpot gets higher, more people play. So when you factor this in, the high the jackpot, the less likely that the winner will be the sole winner.

This also means that the expected value stays negative.

If anyone wants, I'll dig up the original source. I found someone who did detailed math on this several years back (and the math checked out). I've since forgotten where I found it.

 

[G-Man]

You amateur statisticians are why I just had to wait in line behind no less than 14 people at the RaceTrac just to buy a six pack and try to get to my cigar club before all the chairs on the patio are taken.

Always knew I hated math. Didn't know why until just now.

 

[Logan Powell]

As a Canadian, I am tempted to cross the border to do some shopping and buy a ticket.

 

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[luniac]

dropped 20 bucks into the job office pool, cause didn't want everyone to win without me...

instant regret.

 

[becks22]

And still no winners. Seems like such a waste. If yesterday didn't have any winners with so many people playing, it just makes me think why bother. There's literally such a small percentage change that you can just round down to 0. But of course people always think *I could be the winner*

It's been like this though since 2015 when they changed stuff around. The odds are now even more stacked against you.

 

[Ecom man]

I love everyone trying to figure out the odds and saying that it’s a bad bet.

Of course it’s a bad bet. Of course you will most likely lose your $2. But honestly... who cares. We all spend $2 on way worse things (McDonald’s anyone?). At least a lottery ticket isn’t bad for your health.

It’s $2. If wasting $2 everytime the lottery way high is the worst financial mistake you ever make in your life you will be sitting pretty. I can guarantee you I’ve lost 10-20k in the stock market over my lifetime (why do I keep picking stocks that go bankrupt?). Money I’ve lost in the lottery... maybe $50-$100.

 

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[Lex DeVille]

I can guarantee you I’ve lost 10-20k in the stock market over my lifetime (why do I keep picking stocks that go bankrupt?).

I wasted that much on branding this year lol. Bought some tickets a few minutes ago. Don't care what the statistics are. Bought a few minutes of excitement, just like I'd pay for a thrill ride or a bottle of vodka. #noregrets #learntopartwithmoneysometimes

 

[wade1mil]

A lot of self-righteousness in this thread. It's $2. Everyone here has "wasted" $2 many times over. Have fun with it. F*ck.

 

[Guest12120]

I bought few lottery tickets in my life. There is nothing wrong with occasionally playing it for fun. It won't make you rich though.

There are tons of people that truly think that lottery will make them wealthy and it's just a matter of time. I saw on some news site video of people camping overnight in front of the stores to get the tickets. They don't do it just for fun.

On average an American adult spends $325 a year on lottery tickets (North American Association of State and Provincial Lotteries). I'm guessing that this amount spent on business/self help books would do more good to them that hoping they'll hit the jackpot one day.

 

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[TonyStark]

nope.

 

[MetalGear]

More instant gratification versus trusting the process

 

[B. Cole]

Probably won’t play, not knocking anybody that does.

It is an unfortunate reminder though, of how many folks wish for a better life, and how many won’t do anything more than buy a ticket and cross their fingers to get it. Hope the people that hit do as much good as they possibly can with the money.

 

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[B. Cole]

Hooooowever - if I do end up getting a ticket, and I win - I’m going to post a progress/execution thread on it.

 

[MJ DeMarco]

The beautiful thing about the lottery is it forces you to think of your optimal Unscripted life...

What would you be doing if money was no object?

AFTER you travel the world and buy everything YOU want?

What difference would you make?

Become the next political dick like George Soros?
Save the whales?
Activism?
Write?

It's a great thought experiment.

I wasted that much on branding this year lol. Bought some tickets a few minutes ago. Don't care what the statistics are. Bought a few minutes of excitement, just like I'd pay for a thrill ride or a bottle of vodka. #noregrets #learntopartwithmoneysometimes

Yes, entertainment. I'll buy a few for the thrill of it, provided there isn't a line for tickets.

 

[CareCPA]

Yes, a lot of people don't realize you don't win $X from a $X jackpot. You can get that much over the 30-year payout, which has a NPV much below the claimed value. If you want a lump-sum one-time payout, you only get about 55% of the claimed jackpot value.

Then they will automatically withhold 24% federal tax, or $217M on the $904M lump sum. Finally, most states take their cut too, running about $35M - $80M. So e.g. in Arizona, with 5% tax for in-state residents, you'll pay $45M in taxes.

Mega Millions Jackpot Analysis | USA Mega

So out of that "$1.6B" jackpot, your account will actually see about $642M. And THAT'S what you should use for your EV calculations.

I'd still take it if they offered it to me...

Being the debbie downer I am...
Even if they withhold $217 million in federal tax, you would still owe the remainder at tax time. So another 13% of $904 million is ~$117.5 million (top tier income bracket is 37% for 2018). That's a big check to write.

Don't forget, they essentially made state income taxes on the itemized deductions worthless, so no federal benefit for all those state taxes you paid.

 

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[minivanman]

Well, they said it would take over $600 million to buy up all the tickets to have a winner so I guess the lil woman was wrong. lol Now I've never given it much thought but I figured it might take $6-$7 million to buy all the tickets. No clue it would have taken 10x that! Way over our budget! But that's not to say I might buy a ticket or 2 if I go to QT (chocolate milk run).

 

[G-Man]

A lot of self-righteousness in this thread. It's $2. Everyone here has "wasted" $2 many times over. Have fun with it. f*ck.

This^^^

One of my fondest memories was my last night in my hometown after graduating college. We drank some beers then walked down to the corner and bought a Powerball. Spent the rest of the night talking about all the crazy stuff we would do with the money.

One ticket entertained 5 or 6 guys for about 2 hours. That's cheap fun.

 

[Kak]

I love the lottery... because taxation should be regressive.

 

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[SquatchMan]

Still can't get over the fact that someone out there could go from making a decent middle class income of like $100k/year today to being worth $600 million tomorrow.

I guess that person could say it was "100% luck dude" when people ask about the Ferrari.

 

[JAJT]

Canadian here - so no powerball for us.

We usually like getting our friends together and buying into a few tickets when the local lottery hits various "huge" amounts. It's fun and something we all just rarely do (I don't think any of us buy tickets regularly, so it becomes an "event"). We then usually poke fun at each other about the things we'd do with the cash. Ridiculous things we'd never actually do.

Then we lose and curse our luck and go about our lives.

Pretty silly fun for a few bucks.

Even if someone buys tickets regularly - it's not really a big deal, odds be damned. The only time it becomes sad is when people genuinely rely on winning the lottery as their only chance of escape. The folks who drop their bonuses and every spare dollar into it like fiends. The folks who know they'll never amount to anything without it and get genuinely upset when they lose because it means another week of torture. These are the pool souls who you should feel bad for.

But someone who has their shit together and buys a ticket every week for 50 years anyway? Yeah, give them a break. They know what they're doing. They're buying a brief moment of excitement - a raffle ticket to an event they know they probably won't win but would be super exciting if they did. No different from a 50/50 ticket at a sports game, office raffle for a holiday basket, or a mall entry for a new car. They don't EXPECT to win, but they hope they do and they can afford that luxury.

 

[GPM]

There is nothing wrong with spending $2 on a ticket. The issue is that the sort of people who spend money on these lotto's are generally the sort of people who spend $20+ on them. They don't just spend it on this one either, by the end of the year they spend hundreds and hundreds on lotto tickets and end up with literally nothing.

There is a reason they call it the idiot tax...

 

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[Santi M]

I'll buy a few for the thrill of it, provided there isn't a line for tickets.

Hahahahaha that reminded me of the story of the people queuing at a fast-food restaurant for2 hours for getting that free burger. That story in your books impressed me and opened my eyes!

 

[G-Man]

This thread put it into my subconscious to by a mega millions today, ... Ended up buying two because I know @Kak won't pay his fair share of the regressive tax

 

[lowtek]

In for 1 ticket.

 

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[MJ DeMarco]

Hahahahaha that reminded me of the story of the people queuing at a fast-food restaurant for2 hours for getting that free burger. That story in your books impressed me and opened my eyes!

I bought a ticket mid-morning, there was NO LINE cuz everyone was still at work dreaming about winning the lottery.

 

[G-Man]

I bought a ticket mid-morning, there was NO LINE cuz everyone was still at work dreaming about winning the lottery.

They were lamenting how they should have read the fine print about the company's 401k program like the guys at the booth next to me at lunch today.