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When I win the lottery....

Re: When I win the lottery....

FlagDUDE08 said:
One of the most important things, and this is why we hear that so many lottery winners get themselves into trouble, is to understand the difference between one-time and recurring money transfers. A lottery win is one-time revenue. To be financially sound, it should never be used for recurring expenses, because just like a basic material mine, it is subject to depletion. If anything, use the revenue to purchase (one-time) a recurring revenue vehicle (e.g. certificates of deposit, dividend-paying stock, real estate for the express purpose of lease, etc.) if you want to incur recurring expenses.
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Exactly. You need to set up a trust fund for yourself, not just for those relatives you want to share the reward with.

Another thing people forget, and athletes who hit it big right after getting drafted suffer this a lot, is the costs to maintain the lifestyle you suddenly bought for yourself. It's one thing to buy the really nice big house and really nice expensive cars and be able to afford it. It's another thing to then have to pay annually the upkeep costs on the house, the insurance bills on the cars, the tax bills on the property, etc. This is what people forget to budget for. (For the most egregious example, Google "Mike Tyson pet lions".)
 
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Re: When I win the lottery....

FreshFish said:
Somebody somewhere posted a link to a math professor explaining the odds and he said that at these levels even he would be buying a ticket or two, since the "expected gain" is positive, albeit slightly.
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I read an article (could be the same one) online from Money Magazine which also says this. I didn't follow all the math, but essentially, the value of the ticket is worth more than the cost of the ticket.
 
Re: When I win the lottery....

Russell Jaslow said:
I read an article (could be the same one) online from Money Magazine which also says this. I didn't follow all the math, but essentially, the value of the ticket is worth more than the cost of the ticket.
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The IHS link posted a ways back goes through this. The short answer is it really still doesn't once you factor in taxes and the likelihood of multiple winners. It's close at $1.4B, though. If they can get through one more cycle it might be worth it -- except of course the influx of new bettors also tends to pull your expected value back down to zero or below.

The "trick" is very simple -- the built pool represents tickets from prior drawings which are dead -- they literally can't win, even if their numbers are drawn (because their drawings are over).
 
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Re: When I win the lottery....

Well, I finally joined the innumerate. 2 tickets, which means to 10 significant digits I have the same odds as someone with 0 tickets.
 
Re: When I win the lottery....

I went in with co-workers, which is the ideal way to win for me. Split the money and the attention. I still have my monthly ticket by myself, though. Can't do anything about that.

Back to the FUN point of the thread:

I'd like to add the following to my list if I win by myself: donate enough money to the Milwaukee Zoo to have a koala exhibit again, and solve whatever problems they keep having with them. That way EVERYONE gets to enjoy the koalas, and I'm not responsible for my own koala enclave. However, I reserve the right to show up and cuddle a koala whenever I want, and one must be provided to me immediately.

I'd try to donate anonymously, as much as possible, and make it clear that these are one-time gifts. I don't want anything named after me.
 
jen said:
I went in with co-workers, which is the ideal way to win for me. Split the money and the attention. I still have my monthly ticket by myself, though. Can't do anything about that.

Back to the FUN point of the thread:

I'd like to add the following to my list if I win by myself: donate enough money to the Milwaukee Zoo to have a koala exhibit again, and solve whatever problems they keep having with them. That way EVERYONE gets to enjoy the koalas, and I'm not responsible for my own koala enclave. However, I reserve the right to show up and cuddle a koala whenever I want, and one must be provided to me immediately.

I'd try to donate anonymously, as much as possible, and make it clear that these are one-time gifts. I don't want anything named after me.
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Leave some money for Pandas as well.
 
Re: When I win the lottery....

Russell Jaslow said:
I read an article (could be the same one) online from Money Magazine which also says this. I didn't follow all the math, but essentially, the value of the ticket is worth more than the cost of the ticket.
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Does the math take into account the fact that the jackpot is split amongst all winners? You'd have to divide by the number of expected grand prize winners, not to mention any second, third, and xth prize winners which are taken from the same jackpot purse.
 
Re: When I win the lottery....

FlagDUDE08 said:
Does the math take into account the fact that the jackpot is split amongst all winners? You'd have to divide by the number of expected grand prize winners, not to mention any second, third, and xth prize winners which are taken from the same jackpot purse.
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It's highly unlikely there would be more than two jackpot winning tickets, so just hold your horses, Debbie Downer. Also, the minor winners are covered under separate holdings, already fixed into the purchase price of your ticket.
 
Re: When I win the lottery....

St. Clown said:
It's highly unlikely there would be more than two jackpot winning tickets, so just hold your horses, Debbie Downer. Also, the minor winners are covered under separate holdings, already fixed into the purchase price of your ticket.
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When Mega Millions set their record, there were three.
 
Re: When I win the lottery....

JF_Gophers said:
Leave some money for Pandas as well.
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Oh yes, can't forget the pandas. Koalas first, though. I don't think Milwaukee has ever had pandas, and I'm not sure why, but it might be pricier than anticipated to add them. They've had koalas, but they keep getting sick, and they have to send them away.
 
Re: When I win the lottery....

FlagDUDE08 said:
Does the math take into account the fact that the jackpot is split amongst all winners? You'd have to divide by the number of expected grand prize winners, not to mention any second, third, and xth prize winners which are taken from the same jackpot purse.
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Well, the right math does. :)

Expected value should include all of that. It is true that the odds of two winners are theoretically the odds of one winner squared, if all numbers chosen are randomly distributed, but even though the drawn numbers are (one would hope) equally likely to come up, the chosen numbers are very much not evenly distributed. Lower numbers are far more likely to be chosen by players for their emotional value (birthdates, anniveraries, number of children, number of cats, number of abortions...). The expected value of a ticket likely grows the higher the sum of all the numbers on it are. I'm sure there have been studies that actually quantify this, but I wouldn't be surprised if it was substantial.

From the cited study:

For the data we have, in the case of purchasing the 6 least popular numbers, 50, 46, 49, 43, 48, and 51, we find the expected return for a $1.00 bet to be $0.42, while in the case of purchasing the 6 most popular numbers, 9, 7, 3, 8, 11, and 6, the expected return is $0.27.
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That is a very significant effect.

tl; dr: Dumb people bet low numbers and there are lots of them, so bet high numbers or better still, don't bet.
 
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Re: When I win the lottery....

Kepler said:
Well, the right math does. :)

Expected value should include all of that. It is true that the odds of two winners are theoretically the odds of one winner squared, if all numbers chosen are randomly distributed, but even though the drawn numbers are (one would hope) equally likely to come up, the chosen numbers are very much not evenly distributed. Lower numbers are far more likely to be chosen by players for their emotional value (birthdates, anniveraries, number of children, number of cats, number of abortions...). The expected value of a ticket likely grows the higher the sum of all the numbers on it are. I'm sure there have been studies that actually quantify this, but I wouldn't be surprised if it was substantial.

From the cited study:



That is a very significant effect.

tl; dr: Dumb people bet low numbers and there are lots of them, so bet high numbers or better still, don't bet.
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Interesting, that's for sure. Although given the expected value they're calculating (not necessarily the same as house advantage), I think I'll keep the folded dollar bill in the pocket.
 
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