The lottery. The odds.

[Felipe]

I've been thinking about this over and over for weeks now. I can't seem to find any good enough reason not to play the lottery (I mean hypothetically, because I don't care, cause I'm pretty confident I won't win. I'll bet on it!)

Since playing the lottery is -EV, people shouldn't play. But they still do. That's why there is millions of dollars of prize money to be granted to the the lucky winners.

Someone's thinking might go something like this:
"Even if I only play the lottery once a week, its only $52 a year. I might get lucky. Even if I play for 50 years, that's just $2600. I might win, which will cover all of my expenses/losses (tickets)"

"Why not play? I might get lucky? Somebody always wins, right? Why can't it be me? Its just as probable to be me as it is to be Joan Doe down the street."

So I'm thinking, is "it worth playing" the lottery? I know the odds are against winning. For each dollar one invests, mathematically and theoretically speaking, one would expect to win, say, 97cents. But heck! They might just get lucky!

Any thoughts?


Felipe
I'm posting this at other forums too.

[WackityWhiz]

Joan Doe is sexy

[Vince Young]

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I can't seem to find any good enough reason not to play the lottery.

[/ QUOTE ]


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I won't win.

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playing the lottery is -EV

[/ QUOTE ]
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the odds are against winning.

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For each dollar one invests, mathematically and theoretically speaking, one would expect to win, say, 97cents.

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[Macdaddy Warsaw]

I like longshots and gambles too. I play the lottery when it gets big and occassionally buy a scratch off. I know it's not in my best interest to do so, but it's enjoyable to think about all the crap I'd buy.

That said, psychologically speaking, people who lose a limb and people who win the lottery both have been found to return to their original state of happiness after a given time. This means that, if you're unhappy now, winning the lottery won't make you any happier after 6 months.

But yeah, I like a longshot.

[stanky]

[ QUOTE ]
I'm posting this at other forums too.

[/ QUOTE ]

THANK GOD. I was worried only OOT would experience the great thinker that is known as Felipe, but don't stop here spread your word until it reaches the outer corners of the world. Not doing so would be a great disservice to mankind.

[YourFoxyGrandma]

The only reason to play is variance.

EDIT: Then again, it's pretty fun. Who here doesn't like to gamble?

[TStoneMBD]

i think that its important for most people who live mundane lives to exercise -ev gambles that have small effects on their long term networth because everyone needs to hope for something. most people wake up every day for their entire lives to make $15/hr and have absolutely no shot at ever becoming rich. most people dream of making a million dollars but many people will never put themselves in a situation to have a shot at it. it is hard to dream about becoming rich when you know that its not possible. playing the lottery at least makes it remotely possible for this dream to come true for an individual and allows them to dream which probably improves the quality of their life.

fortunately as poker players, we can dream about becoming rich because we are in a position where it is very possible that living rich lives will happen to us. we are in a field where things happen and that is something that many people envy.

[YourFoxyGrandma]

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we are in a field where things happen and that is something that many people envy.

[/ QUOTE ]

Haha. Field.

[Justin A]

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I know the odds are against winning. For each dollar one invests, mathematically and theoretically speaking, one would expect to win, say, 97cents.

[/ QUOTE ]

I'm pretty sure it's closer to 50 cents.

[stabn]

[ QUOTE ]
[ QUOTE ]
I know the odds are against winning. For each dollar one invests, mathematically and theoretically speaking, one would expect to win, say, 97cents.

[/ QUOTE ]

I'm pretty sure it's closer to 50 cents.

[/ QUOTE ]

It really depends on the size of the jackpot doesn't it? Absolute odds are pretty sick but you do have to look at pot odds (including taxes and that bullshit about not giving you the full amount for taking it lump sum).

[squeek12]

My friend and I were discussing this one time when the powerball got tremendously large. He claimed that the prize had gotten so big that betting $1 to win that overinflated pot was actually +EV. We did a little research b/c we were bored and it seemed to check out.

We then decided that we could no longer claim that we were smart gamblers if we didn't buy a ticket, so we did. And of course we both lost.

[Felipe]

Ya should have bought 1000 tickets! And ya. i am a great thinker. And I like spreading the news to all 'corners' of the globe! You're bright!

[Felipe]

[ QUOTE ]
[ QUOTE ]
I'm posting this at other forums too.

[/ QUOTE ]

THANK GOD. I was worried only OOT would experience the great thinker that is known as Felipe, but don't stop here spread your word until it reaches the outer corners of the world. Not doing so would be a great disservice to mankind.

[/ QUOTE ]

Do I know you, skanky?

[rwesty]

Powerball becomes +EV when the jackpot is around $150,000,000.

[Ulysses]

[ QUOTE ]
He claimed that the prize had gotten so big that betting $1 to win that overinflated pot was actually +EV. We did a little research b/c we were bored and it seemed to check out.

[/ QUOTE ]

Other poster: [ QUOTE ]

Powerball becomes +EV when the jackpot is around $150,000,000.

[/ QUOTE ]

Please elaborate.

[mostsmooth]

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I know the odds are against winning. For each dollar one invests, mathematically and theoretically speaking, one would expect to win, say, 97cents.

[/ QUOTE ]

I'm pretty sure it's closer to 50 cents.

[/ QUOTE ]

It really depends on the size of the jackpot doesn't it?

[/ QUOTE ]
and how many tickets you buy

[JoshuaD]

You can't look at winning the lottery just in terms of EV. The jackpot has life-changing value, which could make it worth playing.

Someone with 100 million dollars shouldn't be playing the lottery, he wins another few million and he's gonna be the same dude when he wakes up. On the other hand, a guy who makes 30k a year won't really miss that buck or two a week, but if he happens to get lucky, his entire life will change.

[squeek12]

[ QUOTE ]
[ QUOTE ]
He claimed that the prize had gotten so big that betting $1 to win that overinflated pot was actually +EV. We did a little research b/c we were bored and it seemed to check out.

[/ QUOTE ]

Other poster: [ QUOTE ]

Powerball becomes +EV when the jackpot is around $150,000,000.

[/ QUOTE ]

Please elaborate.

[/ QUOTE ]

I don't remember the exact numbers the powerball uses, but I think it's 6 balls and the balls are numbered up to let's say 50 to make the math easy. That means that you have a 1/50 shot on each ball, or to use poker terms "street."

I think the math would go like this:

(1/50)^6= .000000000064
---This is your chance of winning given my parameters.

With that number, I think you can conclude that the powerball jackpot would have to be like 1.64 billion to make it worth it. But like I said, I'm not sure about the exact parameters of the powerball.

Oh, and it's possible that I am way out of line here. /images/graemlins/crazy.gif

Edit: I just read that the non-powerball balls can be in any order, I think that make a big difference, but I don't know how to express it in math, as I am mathematically challenged. I knew the number I came up with had to be wayyyy too high.

[pryor15]

[ QUOTE ]
We then decided that we could no longer claim that we were smart gamblers if we didn't buy a ticket, so we did. And of course we both lost.

[/ QUOTE ]

don't be so results oriented. just think of all the Sklansky $$ you made.

[xorbie]

So that makes it (1/50)^6*120. So the Jackpot would have to be ~ $150,000,000.

[Stu Pidasso]

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Please elaborate.

[/ QUOTE ]

Its not EV at 150 million. There are a couple of things people forget when trying to determine when a lottery becomes +EV.

1)The lump sum value is considerably less than the stated Jackpot value.

2)There is a chop factor. Since it is possible for more than one winning ticket to be sold, you are not guaranteed the whole jackpot when you pick all the winning numbers(This is why organizations who try to buy every possible combination when the Jackpot gets to be a certain value end up going bust).

3)You probably do not get to write off your losing lotto tickets, but will have to pay taxes on your wins.

That being said, I still spend a few bucks on the lotto when it gets huge. The money I spend is such a low amount that it doesn't have much ultility to me while the money I can win will have a lot of ultility to me. In a sense the lotto could be -EV moneywise but +EV ultilitywise.

Stu

[jason_t]

[ QUOTE ]
[ QUOTE ]
[ QUOTE ]
He claimed that the prize had gotten so big that betting $1 to win that overinflated pot was actually +EV. We did a little research b/c we were bored and it seemed to check out.

[/ QUOTE ]

Other poster: [ QUOTE ]

Powerball becomes +EV when the jackpot is around $150,000,000.

[/ QUOTE ]

Please elaborate.

[/ QUOTE ]

I don't remember the exact numbers the powerball uses, but I think it's 6 balls and the balls are numbered up to let's say 50 to make the math easy. That means that you have a 1/50 shot on each ball, or to use poker terms "street."

I think the math would go like this:

(1/50)^6= .000000000064
---This is your chance of winning given my parameters.

With that number, I think you can conclude that the powerball jackpot would have to be like 1.64 billion to make it worth it. But like I said, I'm not sure about the exact parameters of the powerball.

Oh, and it's possible that I am way out of line here. /images/graemlins/crazy.gif

Edit: I just read that the non-powerball balls can be in any order, I think that make a big difference, but I don't know how to express it in math, as I am mathematically challenged. I knew the number I came up with had to be wayyyy too high.

[/ QUOTE ]

There are 53 regular balls and 42 powerballs.

The number of ways to choose 5 distinct numbers from 53 where order doesn't matter is

53 * 52 * 51 * 50 * 49 / 5 * 4 * 3 * 2 * 1.

Multiply this by 42 for the powerball choices and the number of options in playing powerball for match 5+ powerball is

53 * 52 * 51 * 50 * 49 * 42 / 5 * 4 * 3 * 2 * 1 = (http://www.google.com/search?hl=en&lr=&q=%2853+*+52+*+51+*+50+*+49+*+42% 29+%2F+%285+*+4+*+3+*+2+*+1%29&btnG=Search) 120 526 770.

Thus the odds of winning are 120526769:1.

This doesn't mean it's +EV at $120526769. The pool is split and there are taxes.

[squeek12]

I knew I should have just left this to all the damn math whizzes out there /images/graemlins/blush.gif

[Ulysses]

[ QUOTE ]
[ QUOTE ]
[ QUOTE ]
He claimed that the prize had gotten so big that betting $1 to win that overinflated pot was actually +EV. We did a little research b/c we were bored and it seemed to check out.

[/ QUOTE ]

Other poster: [ QUOTE ]

Powerball becomes +EV when the jackpot is around $150,000,000.

[/ QUOTE ]

Please elaborate.

[/ QUOTE ]

I don't remember the exact numbers the powerball uses, but I think it's 6 balls and the balls are numbered up to let's say 50 to make the math easy. That means that you have a 1/50 shot on each ball, or to use poker terms "street."

I think the math would go like this:

(1/50)^6= .000000000064
---This is your chance of winning given my parameters.

With that number, I think you can conclude that the powerball jackpot would have to be like 1.64 billion to make it worth it. But like I said, I'm not sure about the exact parameters of the powerball.

Oh, and it's possible that I am way out of line here. /images/graemlins/crazy.gif

Edit: I just read that the non-powerball balls can be in any order, I think that make a big difference, but I don't know how to express it in math, as I am mathematically challenged. I knew the number I came up with had to be wayyyy too high.

[/ QUOTE ]

You know that more than one person can pick the same numbers, right?

[squeek12]

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You know that more than one person can win, right?

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Yea, Jason_t did the math correctly as far as odds of hitting the jackpot, but he didn't go into detail about how the possibility of splitting it would affect the point at which it becomes +EV. This math is making me throw up in my mouth a little, gotta stop now.

[teamdonkey]

there's also money payed out to non-jackpot winners. Grab one of the pamphlets, it has the odds of winning for each prize spelled out pretty clearly. Without figuring in taxes and lump sum penalties, it becomes +EV at a little over 100 million assuming you don't split (i had the numbers figured out at one point, but don't have them in front of me).

I think however that the value of that money goes down as the prize gets higher. Winning 5 million dollars radically changes your life. If you won 5 million more after that, it would be great, but not life changing... the second 5 million is worth less to you than the first.

So i'm not sure EV calculations are a great way to go with a huge jackpot like the powerball, unless you're part of a group that would split any winnings.

edit: powerball has absolutely been +EV a few times. Even with taxes penalties and chances of splitting, when it gets well over 200 million there's really no question.

[jason_t]

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there's also money payed out to non-jackpot winners.

[/ QUOTE ]

[ QUOTE ]
This doesn't mean it's +EV at $120526769. The pool is split and there are taxes.

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[Ulysses]

[ QUOTE ]
edit: powerball has absolutely been +EV a few times. Even with taxes penalties and chances of splitting, when it gets well over 200 million there's really no question.

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Please elaborate.

[captZEEbo1]

Isn't the lottery the same concept of having insurance on things? Like, it's a -EV investment to pay for collision insurance, but if you hit the "jackpot" and get into a wreck, you'll be glad you did.

[teamdonkey]

[ QUOTE ]
[ QUOTE ]
edit: powerball has absolutely been +EV a few times. Even with taxes penalties and chances of splitting, when it gets well over 200 million there's really no question.

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Please elaborate.

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from www.powerball.com (http://www.powerball.com), the various non-jackpot prizes pay back 17 cents on the dollar. The chances of winning the jackpot are 1:120,256,770. To get the remaining 83 cents on your dollar, a jackpot win would have to be worth $100,037,219. That part is simple. What isn't as simple is figuring out what the actual jackpot is for your payout to average that figure.

If taxes are 30% (i have no idea), and on average you'll split 20% of the prize pool with other winners (a number from the website), the jackpot would have to be $178,637,891 to break even.

This ignores any lump sum penalties (i don't know what they are). It seems reasonable to me that as the total jackpot approaches $250 million this penalty (if lump sum is what you choose, im unsure about how the payment options work) is overcome.

[rwesty]

It becomes +EV at $100,000,000 if you ignore taxes, multiple winners and the delayed payment/lump sum penalty. I made a quick guess of $150,000,000 after factoring in taxes and multiple winners.

I ignored delayed/lump penalty. I'm guessing that delayed payment is a better deal than taking the lump sum penalty. Lump sum pays out about 60% which makes it necessary for the jackpot to be $270,000,000. I'm going to take a wild guess and say the +EV jackpot amount if you take the delayed payment is less than $250,000,000.

Lump sum might be a better deal if you buy a large amount of tickets that you could write off as losses and save on taxes.

Either way, I start buying at $150,000,000 because the enjoyment I get from that $1 is easily worth it.

[TStoneMBD]

shouldnt lottery tickets be deductible for a professional gambler?

[stigmata]

Some statistician calculated this for the (UK) national lottery, and it was usually +EV on rollover weeks. I forget the details, but essentially if you bought £100 of tickets every time there was a rollover week, by the time you hit the jackpot you would have (on average) died 7 times in a car crash.

[somethingstupid]

At times during the cash windfall (in Boston) it is possible to get 120% return on your investment. I know this for a fact.

[raisethatmofo]

I had a dream last night that I won $3 million. It was such a great dream that I didn't want to wake up. When I woke up, I had this huge let down when I looked around and realized that it was just a dream. That sucked.

You think this could be a sign.

BTW, I played the $50,000 daily 5 or something like that in my stack one year and twice hit 4 out of 5 numbers for $200 payoff each. I was so close. So close twice in fact.

[Monkeyslacks]

Stick it in her pooper!