Question of the Day

[St. Clown]

Is it even possible to get a jackpot that high anymore?

Their webpage indicates that your chances of drawing the correct number are 1 in 292,201,338. So I assume most people figure that if the jackpot got to about $293 million, the odds favor buying a ticket. But that would be back when the ticket was $1, but now it's $2.

Also, I believe that after taking the cash discount and paying taxes, you get about 41-42% of the jackpot total.

I've always assumed, since the ticket went to $2, that you'd need a jackpot of about $1.4 billion to make it a mathematically correct play, but I could be off on that.

There have been a few jackpots that grew to be more than $1B, but I don't follow them close enough to recall exactly how much or when they were. I'm sure the Mega Lotto and Powerball sites have that info.

 

[Fighting Sioux 23]

Is it even possible to get a jackpot that high anymore?

Their webpage indicates that your chances of drawing the correct number are 1 in 292,201,338. So I assume most people figure that if the jackpot got to about $293 million, the odds favor buying a ticket. But that would be back when the ticket was $1, but now it's $2.

Also, I believe that after taking the cash discount and paying taxes, you get about 41-42% of the jackpot total.

I've always assumed, since the ticket went to $2, that you'd need a jackpot of about $1.4 billion to make it a mathematically correct play, but I could be off on that.

I don't factor in taxes, as that presumes a win. I also don't factor in the cash discount, because that also presumes a win (and I'm not locked into the cash discount). If you wanted to factor in those, you would also need to factor in the amount of interest/money you could earn on your winnings, which would likely dwarf what you would ultimately pay in taxes or the cash discount.

So, not factoring in those other issues, if the odds are 1 in 292 million, I would need a jackpot of $584m.

 

[Kepler]

I've always assumed, since the ticket went to $2, that you'd need a jackpot of about $1.4 billion to make it a mathematically correct play, but I could be off on that.

I was wondering about that very question. Is it ever not stupid to play? The only possible times are of course when a jackpot has built for a long, long time, and even then the new influx of competitors keeps lengthening the odds and driving down the expected value.

At the reductio ad absurdum, as soon as it becomes cost effective to play it is by definition cost effective to blanket all numbers. That should lead to a virtually infinite number of entrants ensuring such large numbers of splits that the expected value drops back below 1.

My guess is it is not possible to ever play the lottery as a rational decision unless you have a situation in which loss doesn't matter. Say, you have $500k and you must have $1M or you die. Bankrupting yourself is the same outcome as not playing. (Robinette's situation in Gateway.)

That then changes the calculus and it may be possible to play the lottery rationally.

 

[Kepler]

There have been a few jackpots that grew to be more than $1B, but I don't follow them close enough to recall exactly how much or when they were. I'm sure the Mega Lotto and Powerball sites have that info.

IIRC, Spain.

 

[St. Clown]

I was wondering about that very question. Is it ever not stupid to play? The only possible times are of course when a jackpot has built for a long, long time, and even then the new influx of competitors keeps lengthening the odds and driving down the expected value.

At the reductio ad absurdum, as soon as it becomes cost effective to play it is by definition cost effective to blanket all numbers. That should lead to a virtually in finite number of entrants ensuring such large number of ties that the expected value drops back below 1.

My guess is it is not possible to ever play the lottery as a rational decision.

A company tried to do that once, but there were limiting factors. 1) They could not print the lotto tickets fast enough, or enter the numbers quick enough, for them to purchase enough tickets. That used multiple locations to make the ticket buys. 2) Many states require the use of cash to purchase tickets, no checks or debit/credit cards. That company, IIRC, hit a few of the minor payouts, but did not get the big winner.


...the useless crap I remember from worthless news stories...

 

[Kepler]

A company tried to do that once, but there were limiting factors. 1) They could not print the lotto tickets fast enough, or enter the numbers quick enough, for them to purchase enough tickets. That used multiple locations to make the ticket buys. 2) Many states require the use of cash to purchase tickets, no checks or debit/credit cards. That company, IIRC, hit a few of the minor payouts, but did not get the big winner.


...the useless crap I remember from worthless news stories...

I think that's a cool fact. Thank you.

 

[Kepler]

I was thinking of El Gordo:

Spain's Sorteo Extraordinario de Navidad (Spanish Christmas Lottery) is generally considered to be the world's largest lottery game, with the largest first prize/jackpot. In 2012, the first prize was €720 million (then US$941.8 million; $1.058 billion in 2020 dollars). The total prize pool in 2012 was €2.52 billion (US$3.297 billion; $3.704 billion in 2020 dollars). The tickets for this drawing have pre-printed five-digit numbers, with each set of numbers sold multiple times in series. For example, a ticket with the number "00001" was printed 180 times under different series numbers. Moreover, each series is divided into 10 décimos (tenths in English), which are the individual tickets available for purchase. This results in the top prize being split by a very big number of winners usually from different regions of Spain. The 2011 top prize of €720 million was paid out as €4 million (US$5.2 million) to each of the 180 tickets (or €400,000 for each décimo) with the number 58268.[SUP][1][/SUP] In 2016, the total prize pool was $2.310 billion (US$2.414 billion)

 

[SJHovey]

I don't factor in taxes, as that presumes a win. I also don't factor in the cash discount, because that also presumes a win (and I'm not locked into the cash discount). If you wanted to factor in those, you would also need to factor in the amount of interest/money you could earn on your winnings, which would likely dwarf what you would ultimately pay in taxes or the cash discount.

So, not factoring in those other issues, if the odds are 1 in 292 million, I would need a jackpot of $584m.

You have to apply the cash discount and taxes. To analyze the math equation, you have to calculate what you are wagering, what you will get if you win the wager and what are the odds.

If the odds are 1 out of 292 million that you will win, then in order to make it an even bet, you need to win $292 million that one time that you win a $1 bet. If someone offers you $500 million when the odds are 1 out of 292 million, then it's a good bet for you. But if you only receive $100 million that one time that you win, it's a bad bet for you. Thus, it absolutely matters what you receive in your pocket, today, when you win the bet. If someone says that if you win they'll give you a stream of payments over the next 20 years, you have to discount that stream to see what it's worth today.

The number for Powerball is like $1.4 billion. 42% of that is $588 million, and you need to put in your pocket $584 million if you are betting $2 on a 1 out of 292 million bet.

I think there has been only one Powerball jackpot that qualifies, and that was back in 2016 when it was close to $1.6 billion. However, there were three winning tickets. There was also a MegaMillions jackpot of about $1.5 billion, but MegaMillions odds are even worse that Powerball, so I don't know if that one was even a good mathematical bet, although I'm sure the winner doesn't care at this point.

 

[Fighting Sioux 23]

You have to apply the cash discount and taxes. To analyze the math equation, you have to calculate what you are wagering, what you will get if you win the wager and what are the odds.

If the odds are 1 out of 292 million that you will win, then in order to make it an even bet, you need to win $292 million that one time that you win a $1 bet. If someone offers you $500 million when the odds are 1 out of 292 million, then it's a good bet for you. But if you only receive $100 million that one time that you win, it's a bad bet for you. Thus, it absolutely matters what you receive in your pocket, today, when you win the bet. If someone says that if you win they'll give you a stream of payments over the next 20 years, you have to discount that stream to see what it's worth today.

The number for Powerball is like $1.4 billion. 42% of that is $588 million, and you need to put in your pocket $584 million if you are betting $2 on a 1 out of 292 million bet.

I think there has been only one Powerball jackpot that qualifies, and that was back in 2016 when it was close to $1.6 billion. However, there were three winning tickets. There was also a MegaMillions jackpot of about $1.5 billion, but MegaMillions odds are even worse that Powerball, so I don't know if that one was even a good mathematical bet, although I'm sure the winner doesn't care at this point.

If you are going to apply the cash discount and taxes, then you also have to factor in the interest/money you would earn on your $100m (in your hypothetical) over time.

For me, my number is simply the price of the ticket multiplied by the odds of winning. If the jackpot is greater than that, I play. To me, that is when I feel the odds are in my favor. If you have a different number/equation, and want to factor in all sorts of other factors, then good for you.

 

[SJHovey]

If you are going to apply the cash discount and taxes, then you also have to factor in the interest/money you would earn on your $100m (in your hypothetical) over time.

Why?

If I have only a one chance out of 3 to win a bet and I'm required to bet $1, I better get paid $2 or more when I win, or I'm making a bad bet. If someone tells me that I'll only get $1 if I win, but I can invest that $1 for 20 years and I'll have more money then, I'm not taking the bet.

But, I am willing to make that bet from the other side.

 

[St. Clown]

You have to apply the cash discount and taxes. To analyze the math equation, you have to calculate what you are wagering, what you will get if you win the wager and what are the odds.

If the odds are 1 out of 292 million that you will win, then in order to make it an even bet, you need to win $292 million that one time that you win a $1 bet. If someone offers you $500 million when the odds are 1 out of 292 million, then it's a good bet for you. But if you only receive $100 million that one time that you win, it's a bad bet for you. Thus, it absolutely matters what you receive in your pocket, today, when you win the bet. If someone says that if you win they'll give you a stream of payments over the next 20 years, you have to discount that stream to see what it's worth today.

The number for Powerball is like $1.4 billion. 42% of that is $588 million, and you need to put in your pocket $584 million if you are betting $2 on a 1 out of 292 million bet.

I think there has been only one Powerball jackpot that qualifies, and that was back in 2016 when it was close to $1.6 billion. However, there were three winning tickets. There was also a MegaMillions jackpot of about $1.5 billion, but MegaMillions odds are even worse that Powerball, so I don't know if that one was even a good mathematical bet, although I'm sure the winner doesn't care at this point.

If you're looking at the lottery strictly upon investment terms, then I'm right there with you. However, when the pot gets big enough, people who would normally be risk averse in the manner you're describing will still toss in a few bucks. More or less, call it an entertainment expense to spend some time thinking, "What if...".

 

[SJHovey]

If you're looking at the lottery strictly upon investment terms, then I'm right there with you. However, when the pot gets big enough, people who would normally be risk averse in the manner you're describing will still toss in a few bucks. More or less, call it an entertainment expense to spend some time thinking, "What if...".

Yeah, I get that. I was talking purely from a mathematical bet, as I pointed out to FS23 I'm not sure we really get to that size anymore, with $2/ticket and the taxes/discount issue. But it's fun to throw a couple of bucks in there just for the community of it, if for no other reason.

 

[Fighting Sioux 23]

If you're looking at the lottery strictly upon investment terms, then I'm right there with you. However, when the pot gets big enough, people who would normally be risk averse in the manner you're describing will still toss in a few bucks. More or less, call it an entertainment expense to spend some time thinking, "What if...".

Bingo. Nobody was making the argument that the lottery was a good investment strategy. I was simply stating the logic I use for when to play...which definitely includes the entertainment value you described.

 

[Jimjamesak]

Yeah, I get that. I was talking purely from a mathematical bet, as I pointed out to FS23 I'm not sure we really get to that size anymore, with $2/ticket and the taxes/discount issue. But it's fun to throw a couple of bucks in there just for the community of it, if for no other reason.

You certainly are spending an inordinate amount of time on this subject...

 

[SJHovey]

You certainly are spending an inordinate amount of time on this subject...

Sorry. Betting, odds, and in particular sports betting have always been an interest of mine. Didn't mean to offend anyone.

 

[Jimjamesak]

Sorry. Betting, odds, and in particular sports betting have always been an interest of mine. Didn't mean to offend anyone.

I would certainly think there are other events going on currently that could occupy your time...

 

[St. Clown]

I would certainly think there are other events going on currently that could occupy your time...

Dude...you're here, too.

 

[SJHovey]

Dude...you're here, too.

I had been glancing at the Grand election thread but missed the post where my presence there was requested. I've remedied that, for now.

I probably should figure out how to get alerts here when I'm being summoned.

 

[LynahFan]

Is it even possible to get a jackpot that high anymore?

Their webpage indicates that your chances of drawing the correct number are 1 in 292,201,338. So I assume most people figure that if the jackpot got to about $293 million, the odds favor buying a ticket. But that would be back when the ticket was $1, but now it's $2.

Also, I believe that after taking the cash discount and paying taxes, you get about 41-42% of the jackpot total.

I've always assumed, since the ticket went to $2, that you'd need a jackpot of about $1.4 billion to make it a mathematically correct play, but I could be off on that.

Back in 2016, there was a $1.56B 'pot, but 3 different people picked winning numbers. One of the winners was an engineer at the company where I work: Couple who won $328 million jackpot live ordinary lives | Daily Mail Online

Story I heard is that when he upgraded his SUV, he drove down to a dealership in Miami because he got a better deal. I didn't know him, but he's supposed to be a super nice guy - he kept coming into work doing his normal job until the day he had to legally reveal his identity.

 

[Slap Shot]

Can it get worse?