Did you buy a Powerball lottery ticket?

[JL13]

@Jacob

Does this mean that people who buy lottery tickets are risk averse (willing to pay $2 for insurance to avoid the loss of $1,400,000,000)?

[jacob]

@J_L13 - No, they are risk seeking. They're not avoiding a potential low probability high impact loss. They're seeking a low probability high impact gain. Compare to rational expectations (straight line vs sigmoid). An example of risk aversion would be to pay $2 to insure against meteorite impact.

[EdithKeeler]

Yeah, I bought one. Probably the first one I've bought in 2 years. I figure I have 100% chance more of winning than if I didn't buy one at all. Someone's gotta win, and though I know it's more than unlikely that it won't be me, still....

[C40]

I actually bought one. This was the second time in my life. I've never been interested enough to go to a store or to walk inside a gas station to buy one. Both times happened when work people were buying them. This time it was as easy as the secretary walking by my office and asking if I wanted in on the pool, and me handing her $2. It's a pool of quite a lot of people so I get a lot more chances of winning and my share would be something like $8-15mil.

Shortly after, a couple guys were talking in the hallway:
guy 1 - I told my wife, if we win $10 million, one of us has to keep working. She asked why, and I said: Medical.
guy 2 - Huh?
guy 1 - Health insurance. That stuff is expensive.
guy 2 - How much would it be for you?
guy 1 - Like $2,000 a month.

(10 million could generate $30,000 of income per month.. aaand I'm certain $10 million is like 4 times more money than all the rest of this guy's total compensation will be over the rest of his career (including insurance cost))

The next day, the pool organizer distributed copies of a list of all the pool members and the tickets. The pool is like %75 of all the leadership folks in my area, including 4 of the 5 VPs. I started thinking "boy, that might be some kind of risk they should try to avoid because if we win, our part of the company would be pretty fucked. But then I remembered that it's probably more likely the office building would spontaneously fall over and kill everyone inside


A lot of people say that what they're really paying for when they play the lottery is the dreaming about winning. The thing is - they might as well just dream that they are going to buy a ticket and then win, but don't ever actually buy one. That doesn't really reduce the odds of winning much. That's exactly what I was doing until that secretary walked by my office.

[jacob]

@C40 - I think you just won the best post of this thread award

[jennypenny]

I bought one. Actually, I bought it for Saturday and snagged the powerball number for $4, so I traded it in for TWO tickets for tonight.

The best part has been deciding who we'd invite to share the ticket with us. We agreed we couldn't possibly need more than $10 million, so if we are the only winners tonight and the lump sum after taxes is $960 million, we will share the ticket with 89 other people. It's been revealing to see who made the list and who didn't. (FYI ... "ERE city" gets a share. )

[EdithKeeler]

The best part has been deciding who we'd invite to share the ticket with us. We agreed we couldn't possibly need more than $10 million, so if we are the only winners tonight and the lump sum after taxes is $960 million, we will share the ticket with 89 other people. It's been revealing to see who made the list and who didn't. (FYI ... "ERE city" gets a share. )

I like fantasizing about who I'll give money to, like favorite charities and stuff. I'd give some to my college, make them name a building after me. I'd fund a new, giant animal shelter and then liberate all the pets at the Memphis pound (one of the highest kill rates in the country). Give a big bunch to our local Catholic worker house, the only shelter in the city that houses homeless FAMILIES (otherwise men have to go to one and women and kids to another). I'd pay off my friends' kids' student loans. I'd start a scholarship for foster kids' college tuition--they often "age out" of the system and have no support, etc. to help them with college stuff. Pay off all my friends' mortgages so they could retire early if they wanted to. $10 million would be plenty for me. I think that winning the lottery would be great--I'd never work again, for sure!--but I think the most fun would be giving most of it away.

[The Old Man]

I bought five tickets ($10). From reviewing the winning numbers on the website, it looks like I have won!!!!! I have won $11! Ha Ha. I am laughing all the way to the bank!

[Noided]

I bought one yeah. I usually buy when the expected value/cost of ticket > 1. Come one, it's like a 150% ROI right now, annualized that's like 2,600%!

Buying one ticket increases your odds by a nearly infinite amount. Buying the second ticket increases your odds an infinitisely small amount.

Having hundreds of millions of dollars would be fun. At least as fun as anything else you can buy for $2.

The expected cost is higher than 1 right now?

[JL13]

The expected payout is(was) greater than the cost. It's usually only happens once every year or so. Put simply: The odds of winning are 1:292,201,338.00, the expected jackpot is $1.5b, so the expected value of a ticket is $1,500,000,000/292,201,338 = $5. The cost of the ticket is only $2. so $5/$2 > 1.

The above is oversimplified, but it's in the ballpark.

[vexed87]

Yeah, I bought one. Probably the first one I've bought in 2 years. I figure I have 100% chance more of winning than if I didn't buy one at all. Someone's gotta win, and though I know it's more than unlikely that it won't be me, still....

You forgot to factor picking up a winning ticket in the street, for free!

[jennypenny]

I won $8.

Wow, I double my money every time. If I keep rolling the tickets over, I'll be gazillionaire in no time.

[black_son_of_gray]

Regarding charities: If you won, and before you cashed in the the ticket, you transferred ownership of the ticket to a tax-advantaged entity (e.g. a trust or otherwise, let's say it is yours ), then they cashed in the ticket... would that eliminate the ~%40 tax burden? In other words, is it even possible to get a full payout?

[JL13]

@black_son

I'm not sure if that would reduce the taxes, my hunch is that you would need to transfer it BEFORE the drawing. Even then, the charity wouldn't win the advertised payout if they took the cash option.

[JamesR]

Doesn't seem like it's actually +EV. Have to take the actual lump sum cash payout value into account and then factor in ~50% for taxes (federal is apparently 40% and state fluctuates) and ~20% for the chance of a split payout (though the 20% chance is hearsay).

So 950 million lump sum * 50% taxes * 80% (less 20%) = $380 million

$380 million / 292,201,338 = $1.30 which is < $2 so -$0.70 EV

source: https://www.reddit.com/r/poker/comments ... powerball/ (wouldn't bother reading this link tbh)

[JL13]

@JamesR, you're a spoilsport! Don't forget to add the value of the other combinations (4 matching numbers etc). It may be more like $1.35!

[Scrubby]

If I suggested you pick the numbers, 1, 2, 3, 4, 5, 6 for your lottery ticket, would you think those were as good a choice as any for your ticket? If not, why not? All the numbers have exactly the same chance of coming up after all.

I wouldn't, because those are the most commonly submitted numbers. Even if I did win the prize would be unusually low.

[OldPro]

Jennypenny, in Canada, lottery wins are not taxable income. The income from your winnings after you win is but not the initial lump sum win. Seems the IRS want their pound of flesh no matter where you get the money from.

Maybe lotteries should be required by law to advertise just how much you actually can expect to walk away with in your pocket after all the deductions get made. Kinda the reverse of something like airlines here in Canada who would advertise a flight price without including the taxes and airport fees, etc. which when added doubled the price of the flight.

[Dragline]

I won $8.

Wow, I double my money every time. If I keep rolling the tickets over, I'll be gazillionaire in no time.

"You gotta bet big to win big."

[fiby41]

Tennessee couple with 1 of 3 winning Powerball jackpot tickets to keep jobs