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.

[TheHammer24]

PA Daily number is 1000:1 against and it pays 500 so thats an EV of -.50. I figured it out last night, the EV of powerball is 0 when the jackpot is 100,037,219 dollars. So if you are looking for +EV play it when it gets that high (and it sometimes does). However, that is assuming that you won't share the same number as someone else.

There are 8 other ways to win Powerball. (Check site for payouts and odds).

Match Prize Odds

Grand Prize 1 in 120,526,770.00
$100,000 1 in 2,939,677.32
$5,000 1 in 502,194.88
$100 1 in 12,248.66
$100 1 in 10,685.00
$7 1 in 260.61
$7 1 in 696.85
$4 1 in 123.88
$3 1 in 70.39



The EV on each adds up to

.043+.032+.010+.027+.009+.008+.009+.034=.17 on the dollar.

1-.17=.83

So the Jackpot EV pust be .83 on the dollar

(Jackpot)(1/120,526,770.00)=.83

Jackpot=100,037,219

Of course, this is slightly -EV because if someone ties you only win part of that prize. And even lower if you take the lump sum instead of the annuity.