Global War on Terror Version 6 - Perpetual Motion Machine

[unofan]

Still a negative expected value.

Not mathematically. I haven't checked out the odds since they lengthened them a while back by adding more numbers, but let's ball park it at 1:300,000,000 to hit the jackpot.

Even risking a split jackpot, a $500,000,000 payout plus the other smaller payouts (you have a 1:45 shot of at least getting your dollar back) likely put the expected payout close to or above $1.

Back when the jackpot odds were roughly 1:175,000,000, the break even point for expected value was a jackpot of about $250,000,000, I think.

[FreshFish]

Re: Global War on Terror Version 6 - Perpetual Motion Machine

If everyone knew how bad the odds were and didn't play, wouldn't the odds then improve greatly for games based on number of entries?

Catch 22!

Not quite, the size of the jackpots reflect the participation; that's why rollover weeks lead to higher payouts. The state always collects its vig, always.

[FreshFish]

Re: Global War on Terror Version 6 - Perpetual Motion Machine

Not mathematically.

??

Usually you are really sharp on these questions.

The state(s) always make(s) money on the lottery, they skew the odds that way to make sure they always collect. Hence all money spent to purchase tickets in aggregate < all money paid out in aggregate.

The example you cited neglected to include rollovers from prior weeks.

Now, if a person only played large jackpots and never played any other time, your math might work, but even then I'd be surprised if it did: as the jackpots get larger, more people play, so that the money collected that week gets larger while the jackpot doesn't (until the following week, anyway). Even if you as an individual only play jackpots, even then, in aggregate, everyone together is always chasing from behind.

and if you live in a state that has a state income tax and you win, you can be sure that the state gets its tax withholding before the payout occurs!

[unofan]

If everyone knew how bad the odds were and didn't play, wouldn't the odds then improve greatly for games based on number of entries?

Catch 22!

The only part of powerball or any other major lottery game based on participation is the progressive jackpot. Otherwise they're just roulette writ large.

[FlagDUDE08]

Re: Global War on Terror Version 6 - Perpetual Motion Machine

Not mathematically. I haven't checked out the odds since they lengthened them a while back by adding more numbers, but let's ball park it at 1:300,000,000 to hit the jackpot.

Even risking a split jackpot, a $500,000,000 payout plus the other smaller payouts (you have a 1:45 shot of at least getting your dollar back) likely put the expected payout close to or above $1.

Back when the jackpot odds were roughly 1:175,000,000, the break even point for expected value was a jackpot of about $250,000,000, I think.

You're assuming everyone who hits the big one gets paid the full jackpot value. They don't. It gets split amongst the winners.

[unofan]

??

Usually you are really sharp on these questions.

The state(s) always make(s) money on the lottery, they skew the odds that way to make sure they always collect. Hence all money spent to purchase tickets in aggregate < all money paid out in aggregate.

There's a point with any progressive jackpot system where the expected value of a play exceeds the cost of a play. Whether we're talking the lottery or a slot machine, the principle is the same

The loytery/casino make their money with everyone playing before the jackpot hits that point. By the time it reaches that point, if ever, they don't care because they've already banked enough to more than cover the jackpot.

The person who only plays when the jackpot is at $1,000,000,000 has a positive expected return. It's the people who pay when the jackpot resets to $10,000,000 that have negative expected value.

[unofan]

You're assuming everyone who hits the big one gets paid the full jackpot value. They don't. It gets split amongst the winners.

Hence the "even risking a split jackpot" comment.

[St. Clown]

Re: Global War on Terror Version 6 - Perpetual Motion Machine

Not quite, the size of the jackpots reflect the participation; that's why rollover weeks lead to higher payouts. The state always collects its vig, always.

No, not all of them. In MN, we have the "MN Millionaire's Raffle" that happens every December There is a guaranteed winner of $2MM, regardless of how many people play the game, and they cap the number of tickets sold. Every year they run out of raffle tickets so it's a moot point, but it's still a theoretical possibility.

[Bob Gray]

Re: Global War on Terror Version 6 - Perpetual Motion Machine

No, not all of them. In MN, we have the "MN Millionaire's Raffle" that happens every December There is a guaranteed winner of $2MM, regardless of how many people play the game, and they cap the number of tickets sold. Every year they run out of raffle tickets so it's a moot point, but it's still a theoretical possibility.

I'm pretty sure if participation dropped off, they'd adjust the prize down to a million or whatever level it would take to still make a profit. It's not like gambling is a social good or something, so if it's not turning a profit for the state, I'm pretty sure they'd get out of the business pronto or fix it to make a profit.

[St. Clown]

Re: Global War on Terror Version 6 - Perpetual Motion Machine

I'm pretty sure if participation dropped off, they'd adjust the prize down to a million or whatever level it would take to still make a profit. It's not like gambling is a social good or something, so if it's not turning a profit for the state, I'm pretty sure they'd get out of the business pronto or fix it to make a profit.

Yes, future raffles would be impacted, but that current year's raffle. After a few years they did adjust the raffle upward due to high demand. They increased the prizes and increased the number of tickets sold. Still, regardless of that first year's sales, someone was going to win that million dollars.

[Patman]

You're assuming everyone who hits the big one gets paid the full jackpot value. They don't. It gets split amongst the winners.

It can happen, under certain plausible conditions, that the best action is to buy. As its noted, it has to beat taxes, it has to beat odds, it has to best inflation or the lump sum cut, and the possibility of massive buy in splitting the pot amongst several winners.

That being said, while difficult, this is not impossible.

Over the decades there have been examples of people trying to buy every combination... Usually the law gets changed soon after. About 10 years ago somebody tried to pull a similiar stunt in Massachusetts buying a high percentage of possible combinations. The lottery tried to change the law on the fly leading to a lot of annoyed people.

These people, who are throwing serious cash, have surmised at some point it becomes an investment more than a pure gamble. Fact is, under certain circumstances it becomes financially logical. For most of us its a high variance bet which is obscenely likely to result in a loss. But, from a risk calculation involving pure dollar totals as my endpoint then there is a point where playing makes financial sense.

Value/odds*taxvig*payoutoptionfactor/expectnumberofsharedwinners > ticketprice

[Bob Gray]

Re: Global War on Terror Version 6 - Perpetual Motion Machine

Yes, future raffles would be impacted, but that current year's raffle. After a few years they did adjust the raffle upward due to high demand. They increased the prizes and increased the number of tickets sold. Still, regardless of that first year's sales, someone was going to win that million dollars.

Sure. But the premise stands that these things are fixed so the payoffs are less than the payins, recognizing there could be an aberration here and there before an adjustment is made. If people somehow find entertainment value in this, that's at least some sort of reason for doing it. Other than that, as Dave Ramsey said, it's a tax on the poor and those who can't do math.

[St. Clown]

Re: Global War on Terror Version 6 - Perpetual Motion Machine

Sure. But the premise stands that these things are fixed so the payoffs are less than the payins, recognizing there could be an aberration here and there before an adjustment is made. If people somehow find entertainment value in this, that's at least some sort of reason for doing it. Other than that, as Dave Ramsey said, it's a tax on the poor and those who can't do math.

I agree with this completely, which is why I rarely buy a ticket. Sometimes I do because it can be fun to have the occasional daydream.

[FreshFish]

Re: Global War on Terror Version 6 - Perpetual Motion Machine

I rarely buy a ticket. Sometimes I do because it can be fun to have the occasional daydream.

Totally concur, a $1 daydream can be worth the outlay.

For some reason your post reminded me of one of my all-time favorite quotes from Thoreau:

Go ahead and build your castles in the air, for that is where they belong.
Now go and put foundations under them.

[Patman]

So again... What did that article have to do with AIPAC?

C'mon... FD can engage in certain theories as long as Kepler does as well.