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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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.

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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!

[TheHammer24]

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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

[benfranklin]

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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]

[d10]

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.

[lefty rosen]

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]

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]

[Tilt]

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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.

[Marc H]

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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]