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#1
11-20-2004, 10:29 PM
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Taking the concept of pot odds to the absurd extreme...
The Florida Lottery jackpot is up to $50M tonight. I was at the store and decided to buy a ticket. I checked the odds of winning: 1 in 23,000,000.
So I bought 2 tickets and walked out saying, "I think I got the best of that bet." [img]/images/graemlins/grin.gif[/img] 
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#2
11-20-2004, 10:34 PM
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Re: Taking the concept of pot odds to the absurd extreme...
Just barely, and not then.
You bought the ticket with after tax cash. Your winnings will be taxed. Is FLA one of those no state income tax havens? Finally the payout over 20 years or whatever is 50 million (generally), if you want your money today, you take at least 50% haircut. So figure a $50 million dollar win to have a PV net of tax of around $15 million and . . . . see?
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#3
11-21-2004, 12:13 AM
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Re: Taking the concept of pot odds to the absurd extreme...
You also have to take into account the chances of splitting the jackpot.
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#4
11-21-2004, 01:09 AM
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Re: Taking the concept of pot odds to the absurd extreme...
Dude, you got owned.
Just kidding. Good luck on the lotto!
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#5
11-21-2004, 04:40 AM
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Re: Taking the concept of pot odds to the absurd extreme...
Here is a way to account for the splits, assuming that all tickets are independent and uniformly distributed among the possibilities. Let n be the number of tickets sold. Estimate the probability the jackpot is won: 1-(1-p)^n, where p is the probability a ticket wins. If the jackpot is won, you expect to get 1/n of it. So, your expected wins from the jackpot is
jackpot*(1-(1-p)^n)/n. You need to discount the wins for the taxes and the present value. However, you can also add about $0.25 on the dollar for the lesser prizes for matching 3, 4, or 5 out of 6.
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