Lottery at the +EV Point
 

The Powerball Lottery is at a record High, I'm wondering if anyone knows if it has reached +EV status to buy a ticket? I know you still need to factor in the chances of a divided jackpot.
Link:
http://www.cnn.com/2005/US/10/18/pow....ap/index.html

Re: Lottery at the +EV Point
 

might be +ev, but varience is a bitch on lotto.

Re: Lottery at the +EV Point
 

I figured this out in the probability forum once. It was like 120 million or so?

Re: Lottery at the +EV Point
 

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The Powerball Lottery is at a record High, I'm wondering if anyone knows if it has reached +EV status to buy a ticket? I know you still need to factor in the chances of a divided jackpot.
Link:
http://www.cnn.com/2005/US/10/18/pow....ap/index.html

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Also factor in that the jackpots are paid out over a several year period. Money you are going to get several years in the future is worth much less than money you have today, making the jackpots worth significantly less than the numbers you see quoted in the headlines.

Re: Lottery at the +EV Point
 

It's 180M-1 to hit the powerball jackpot. The jackpot is $340 million. Seems plus EV to me, but my (limited) understanding is the possibility of a split moves it closer to break even. It's even worse if you factor in taxes and the penalty you pay for getting it lump sum (which even the biggest moron on Earth would do).

Jeff

Re: Lottery at the +EV Point
 

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. It's even worse if you factor in taxes and the penalty you pay for getting it lump sum (which even the biggest moron on Earth would do).

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Are you serious???

Re: Lottery at the +EV Point
 

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. It's even worse if you factor in taxes and the penalty you pay for getting it lump sum (which even the biggest moron on Earth would do).

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Are you serious???

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Yes, no way I wouldn't take the lump sum in a lotto.

Re: Lottery at the +EV Point
 

lump sum is BETTER! you will make WAY more in interest over those 25yrs than whatever the amount with annuity. the only reason to take annuity is if you cant control your spending. (50% of lottery winners go bankrupt within 5 yrs.)

See the Probability forum.

btw: $340M (~170M lump sum) is still -EV if you factor in the 40% in taxes (fed/state/city) you pay.

Re: Lottery at the +EV Point
 

Oh sorry by bad, i misread the post. It is definitely much better to take the lump sum.

Re: Lottery at the +EV Point
 

Yes, you have to be a tard not to take the lump sum. When you take the lump sum the interest payments you recieve are a little less than the payouts you would recieve, but YOU STILL HAVE MILLIONS IN THE BANK. In this case taking the lump sum would work out to be worth tens of millions more than the monthly or whatever payouts.

Re: Lottery at the +EV Point
 

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. It's even worse if you factor in taxes and the penalty you pay for getting it lump sum (which even the biggest moron on Earth would do).

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Are you serious???

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What happens if you die in the next 5 years? You might as well get the lump sum in case.

Yes, no way I wouldn't take the lump sum in a lotto.

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Re: Lottery at the +EV Point
 

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the possibility of a split moves it closer to break even. It's even worse if you factor in taxes and the penalty you pay for getting it lump sum

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The possibility of a split is a legitimate consideration for discounting the EV of this bet. (Similar to the problem with drawing to a 1 card OESD).

The tax issue should not be considered in the calculation. We dont take tax into account when making other EV decision, so there's no reason for doing so in the lottery context.

The issue of the discount from a lump sum payment also isn't proper to consider. This is just a market question about what is a legitimate discount rate to use. When you have the choice of taking an annuitized payment, or a lump sum discounted, just choose according to whether you believe the discount rate being used is correct. This doesn't effect the EV of playing the lottery; it is more like a future, EV-based decision that you will need to make based on the assumption that you have already won.

Re: Lottery at the +EV Point
 

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btw: $340M (~170M lump sum) is still -EV if you factor in the 40% in taxes (fed/state/city) you pay.

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Why the "F" are you guys so worried about whether or not the lotto is -/+EV or not? Wake up, it's $340 Million at stake! I don't play the stupid thing but I am this time just because it's so damn big. I even blew $20, if I don't hit [censored], will I go broke? NO!, will I not retire on time? NO!, is my life affected by it? NO! Will I have to get a loan to pay my bills? NO! Does my girlfriend even care? NO! Will I feel the need to get my money back and play lotto every week until I either go broke or win it? NO! Will I look back on this moment in life and say geez, if I had not made that loose bet I would be up $20 in gambling instead of being labeled a "looser"? NO! Play the stupid thing and hope you get lucky.

GET A GRIP!

Re: Lottery at the +EV Point
 

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It's 180M-1 to hit the powerball jackpot. The jackpot is $340 million. Seems plus EV to me, but my (limited) understanding is the possibility of a split moves it closer to break even. It's even worse if you factor in taxes and the penalty you pay for getting it lump sum (which even the biggest moron on Earth would do).

Jeff

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You can't forget that there are other ways to win nonjackpot prizes which increase EV

Re: Lottery at the +EV Point
 

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It's 180M-1 to hit the powerball jackpot. The jackpot is $340 million. Seems plus EV to me, but my (limited) understanding is the possibility of a split moves it closer to break even. It's even worse if you factor in taxes and the penalty you pay for getting it lump sum (which even the biggest moron on Earth would do).

Jeff

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The lump sum is about $165 million. Just the federal taxes are going to knock that down to about $100 mil. Don't know what the odds are of multiple winners. That depends a lot on what numbers hit. People probably pick numbers like 7 or 11 more often than 47 or 52. So it's still likely -EV even at $340 mil. But I got my tickets. [img]/images/graemlins/cool.gif[/img]

Re: Lottery at the +EV Point
 

The utility of $340M is not that much more for me than the utility of whatever the powerball jackpot normally goes for. Also I don't have the bankroll to withstand the variance. So I won't be getting a ticket.

Re: Lottery at the +EV Point
 

The average lottery winner is redneck who has never earned more than 10 bucks an hour, that's a disaster waiting to happen. In my country half seem to be that type and the other half seem to be welfare moms, so that's why people go broke......... [img]/images/graemlins/grin.gif[/img] [img]/images/graemlins/blush.gif[/img]

Re: Lottery at the +EV Point
 

Maybe I'm missing something about how this thing works, but how can it ever be +EV? There's no way the organizers of any lottery would set it up to pay out more money than they're taking in. As long as total revenue > total payout, it has to be -EV for the average player, right? Or is there some magical money fairy who's just adding millions to the prize pool? Especially when you subtract the massive amount lost to taxes, I don't see this being anywhere near +EV. Not that I'd fault anyone for taking a shot with money they're willing to lose. [img]/images/graemlins/tongue.gif[/img]

Re: Lottery at the +EV Point
 

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lump sum is BETTER! you will make WAY more in interest over those 25yrs than whatever the amount with annuity. the only reason to take annuity is if you cant control your spending. (50% of lottery winners go bankrupt within 5 yrs.)

See the Probability forum.

btw: $340M (~170M lump sum) is still -EV if you factor in the 40% in taxes (fed/state/city) you pay.

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I bet you could take the lump sum and buy a better annuity.

Re: Lottery at the +EV Point
 

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Maybe I'm missing something about how this thing works, but how can it ever be +EV? There's no way the organizers of any lottery would set it up to pay out more money than they're taking in. As long as total revenue > total payout, it has to be -EV for the average player, right? Or is there some magical money fairy who's just adding millions to the prize pool? Especially when you subtract the massive amount lost to taxes, I don't see this being anywhere near +EV. Not that I'd fault anyone for taking a shot with money they're willing to lose. [img]/images/graemlins/tongue.gif[/img]

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Um, are you that unfamiliar with state lotteries?
All the money built up from past weeks with no winner are what can make THIS PARTICULAR drawing +EV. It's what's called an "overlay" in your world. [img]/images/graemlins/smile.gif[/img]

Re: Lottery at the +EV Point
 

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Maybe I'm missing something about how this thing works, but how can it ever be +EV? There's no way the organizers of any lottery would set it up to pay out more money than they're taking in. As long as total revenue > total payout, it has to be -EV for the average player, right? Or is there some magical money fairy who's just adding millions to the prize pool? Especially when you subtract the massive amount lost to taxes, I don't see this being anywhere near +EV. Not that I'd fault anyone for taking a shot with money they're willing to lose. [img]/images/graemlins/tongue.gif[/img]

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The same way Party's BBJ can be +EV at certian times... so long as there are no winners, the prize pool keeps growing until the bet becomes theoretically +EV.

Re: Lottery at the +EV Point
 

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Maybe I'm missing something about how this thing works, but how can it ever be +EV? There's no way the organizers of any lottery would set it up to pay out more money than they're taking in. As long as total revenue > total payout, it has to be -EV for the average player, right? Or is there some magical money fairy who's just adding millions to the prize pool? Especially when you subtract the massive amount lost to taxes, I don't see this being anywhere near +EV. Not that I'd fault anyone for taking a shot with money they're willing to lose. [img]/images/graemlins/tongue.gif[/img]

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The reason it can be +EV is because it's progressive. the current prize amount takes into account previous ticket purchases that are no longer eligable to win. So yes the magical money fairies are last week's losers.

Re: Lottery at the +EV Point
 

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Maybe I'm missing something about how this thing works, but how can it ever be +EV? There's no way the organizers of any lottery would set it up to pay out more money than they're taking in. As long as total revenue > total payout, it has to be -EV for the average player, right? Or is there some magical money fairy who's just adding millions to the prize pool? Especially when you subtract the massive amount lost to taxes, I don't see this being anywhere near +EV. Not that I'd fault anyone for taking a shot with money they're willing to lose. [img]/images/graemlins/tongue.gif[/img]

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I think the magical money fairies are the ones that played the previous 19 times that it didn't hit. Their money stays in the pool so if you wait until the lotto gets a certain size it can be +EV. Cash value tonight will be $164M so after taxes that's like $100M? Odds are 1 in 146M so it's still not +EV I guess.

To the poster that mentioned the utility: The Powerball starts at $10M so after taxes that would be a cash value of $3M or so. You have to admit that there is a utility difference between $3M and $100M.

Re: Lottery at the +EV Point
 

EV, utility, lump sum, etc.......

Remember, if you can't swim, don't worry. The fall will probably kill you.

Re: Lottery at the +EV Point
 

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It's 180M-1 to hit the powerball jackpot. The jackpot is $340 million. Seems plus EV to me, but my (limited) understanding is the possibility of a split moves it closer to break even. It's even worse if you factor in taxes and the penalty you pay for getting it lump sum (which even the biggest moron on Earth would do).

Jeff

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You can't forget that there are other ways to win nonjackpot prizes which increase EV

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I calculate the total figure as $0.843 worth of EV per $1 ticket.
This includes 40% taxes for the top three prizes and the assumed lump sum payment (and yes taxes definetly effect EV).

What makes this lottery +EV however is the new rule that the grandprize can only grow by 25 mil per drawing and the surplus is divided amongst those that win the second tier prize normally valued at 200,000. This bonus pool is already at 20 mil. odds of hitting are 1 in 3,563,608.

Even with a split grand prize and several splits of the second prize, this is still massively +EV.

Re: Lottery at the +EV Point
 

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btw: $340M (~170M lump sum) is still -EV if you factor in the 40% in taxes (fed/state/city) you pay.

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Why the "F" are you guys so worried about whether or not the lotto is -/+EV or not? Wake up, it's $340 Million at stake! I don't play the stupid thing but I am this time just because it's so damn big. I even blew $20, if I don't hit [censored], will I go broke? NO!, will I not retire on time? NO!, is my life affected by it? NO! Will I have to get a loan to pay my bills? NO! Does my girlfriend even care? NO! Will I feel the need to get my money back and play lotto every week until I either go broke or win it? NO! Will I look back on this moment in life and say geez, if I had not made that loose bet I would be up $20 in gambling instead of being labeled a "looser"? NO! Play the stupid thing and hope you get lucky.

GET A GRIP!

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I posted this more for academic curiosity than anything else. I don't play the lotto, and I wouldn't play it if the jackpot hit 750 million, the odds are just too low for it to be worth my time and money.

Re: Lottery at the +EV Point
 

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Maybe I'm missing something about how this thing works, but how can it ever be +EV? There's no way the organizers of any lottery would set it up to pay out more money than they're taking in. As long as total revenue > total payout, it has to be -EV for the average player, right? Or is there some magical money fairy who's just adding millions to the prize pool? Especially when you subtract the massive amount lost to taxes, I don't see this being anywhere near +EV. Not that I'd fault anyone for taking a shot with money they're willing to lose. [img]/images/graemlins/tongue.gif[/img]

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The magic money fairy is the fact that if nobody hits the lottery, the money rolls over to the next prize pool. Nobody has hit this lottery in a long time, so there has been a lot of rollover.

Re: Lottery at the +EV Point
 

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I posted this more for academic curiosity than anything else. I don't play the lotto, and I wouldn't play it if the jackpot hit 750 million, the odds are just too low for it to be worth my time and money.

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Yea but its worth buying a few tickets when you can get over 350 million just to look at them and drift off into daydreams until the drawing. I've never played the lottery before, but just had to do it this time

Looks like it\'s -EV
 

Even if you might assume (foolishly) that you are the lone winner it looks like a -EV bet. Prolly $1 lotto >> $0.80 prize.

There have been a few +EV plays. Smaller state lottos in the past. I recall a group intending to wheel the lotto and the lottery commission wouldn't sell them a wheel ticket. That's like saying we don't want $X million in extra revenue. What are the odds of a state functionairy pissing away a few $million?

Re: Lottery at the +EV Point
 

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btw: $340M (~170M lump sum) is still -EV if you factor in the 40% in taxes (fed/state/city) you pay.

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Why the "F" are you guys so worried about whether or not the lotto is -/+EV or not? Wake up, it's $340 Million at stake! I don't play the stupid thing but I am this time just because it's so damn big. I even blew $20, if I don't hit [censored], will I go broke? NO!, will I not retire on time? NO!, is my life affected by it? NO! Will I have to get a loan to pay my bills? NO! Does my girlfriend even care? NO! Will I feel the need to get my money back and play lotto every week until I either go broke or win it? NO! Will I look back on this moment in life and say geez, if I had not made that loose bet I would be up $20 in gambling instead of being labeled a "looser"? NO! Play the stupid thing and hope you get lucky.

GET A GRIP!

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I posted this more for academic curiosity than anything else. I don't play the lotto, and I wouldn't play it if the jackpot hit 750 million, the odds are just too low for it to be worth my time and money.

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You are just plain dumb.

Re: Lottery at the +EV Point
 

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Why the "F" are you guys so worried about

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If I don't hit [censored], will I go broke? NO!, will I not retire on time? NO!, is my life affected by it? NO! Will I have to get a loan to pay my bills? NO! Does my girlfriend even care? NO! Will I feel the need to get my money back and play lotto every week until I either go broke or win it? NO!

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GET A GRIP!

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I think this qualifies as one of those 'pot, kettle, black' situations.

Re: Lottery at the +EV Point
 

1. The lottery is NOT 340m it IS 160.4m. They always tell you the annuitized value because it is a larger number. The cash payout today is the samller number.

2. Using todays payout it is +EV because there are 140m number combinations that could win.

3. Take the lump sum if you win. An annuity is an investment that will pay out the advertized amount over the next 25 years, including the principle. They do not put alot of effort into finding the best investments for you, so you should easily be able to invest it better yourself.

Feel free to tear my statements apart.

Re: Lottery at the +EV Point
 

If memory serves me correctly, the lump sum is discounted to 40%. its been a few years since I have lived in a powerball state. Tax wise, it could be better to defer pyaments.

Re: Lottery at the +EV Point
 

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1. The lottery is NOT 340m it IS 160.4m. They always tell you the annuitized value because it is a larger number. The cash payout today is the samller number.

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It bothers me that they do this.
Same goes for slot jackpots at casinos.
The person in the ad (billboard or whatever) who won $20k didn't really win $20k. They only REALLY won $12k or whatever.

It's incorrect and misleading imo.


Lotteries also bug me because when I'm at the convenience store just trying to buy some milk or beer or something there's always some shmoe ahead of 8 people in line holding things up because they are buying 37 powerball or scratch-off tickets or whatever and the machine is messing up on the cashier, etc etc.

Or the guy is just standing there trying to decide which idiotic -EV scratch-off game he wants to play.
"Give me 5 of the Lucky 7's...and 5 of the other one with the numbers that go across, and 4....no, make that 6, of the Insta-Super-Fun-Cash-Dopplar-Radar-8000's" blah blah blah.

C'mon dude. I don't want to wait in line forever while you evidently want to give the rest of your rent-money to the state.

Re: Lottery at the +EV Point
 

One thing to remember when discussing whether or not playing a game with a large progressive jackpot is +EV is that at some point in time money will have a diminishing marginal utility for you.

$240 million is probably not 240 times more valuable to you than $1 million would be.

$240 million is not 240 million times better than one dollar. This will screw up your calculations.

(I didn't see that anyone already mentioned this concept, but I only skimmed.)

Re: Lottery at the +EV Point
 

Yeah. This is a very good point actually.


Everyone goes hyper-spaz when the powerball passes $100-mil (the lump pay-out....not the announced figure) as if playing it when you would ONLY win $40-mil is somehow a waste of time.


To me...winning $100-mil would only be marignally better than winning $40-mil.
I certainly would not be more than twice as excited or happy with $100-mil.

In fact, the thrill of winning $10-mil for me would be difficult to exceed.

Re: Lottery at the +EV Point
 

Ok, I thought I was good at math, but apparently not. For you super math whizzes out there, why are the odds of getting JUST the powerball right 69-1? Arent there only 54 numbers?

Take a look here:

http://www.powerball.com/powerball/pb_prizes.asp

Re: Lottery at the +EV Point
 

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Yeah. This is a very good point actually.


Everyone goes hyper-spaz when the powerball passes $100-mil (the lump pay-out....not the announced figure) as if playing it when you would ONLY win $40-mil is somehow a waste of time.


To me...winning $100-mil would only be marignally better than winning $40-mil.
I certainly would not be more than twice as excited or happy with $100-mil.

In fact, the thrill of winning $10-mil for me would be difficult to exceed.

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A thrill next years WSOP ME winner may get to experience.

Re: Lottery at the +EV Point
 

Whether its +EV or not, landing it would seriously enhance your meta game.

Re: Lottery at the +EV Point
 

I usually buy a Powerball ticket when it's over $100M.

To me it's the fun of thinking about what I'd do with the money and talking with the wife/friends about it that give Powerball superjackpots the intangible +EV characteristic.