Odds in whose favor?

Discussion in 'Politics, Religion, Social Issues' started by Simgar988, Mar 30, 2012.

  1. Simgar988 macrumors 65816

    Simgar988

    Joined:
    Jul 22, 2009
    Location:
    UYBAATC
    #1
    With the Mega Millions Jackpot at $640 million, it is the largest the world has ever seen. In the news and on the streets "realists" are chirping about how they'd never buy a ticket and the basic math makes ticket buyers look stupid.

    If the odds are 1 in 175 million of hitting the Mega Millions jackpot, would buying a $1 ticket have positive expected value for this particular prize?
     
  2. Sedulous macrumors 68000

    Sedulous

    Joined:
    Dec 10, 2002
    #2
    A $500,000,000 return on $1 even on ridiculously long odds is a decent bet. It would be crazy to expect or sacrifice financial stability to win.
     
  3. Heilage macrumors 68030

    Heilage

    Joined:
    May 1, 2009
    #3
    Only gamble with money you can afford to lose. :)
     
  4. Fazzy macrumors 6502

    Joined:
    Oct 12, 2011
    Location:
    check the tracking device
    #4
    Call me a cynic, but when I first saw the amount that was up for grabs, my first thought was "how much of this will go straight to the tax man?"

    And since this is in PRSI, I dont think having a republican gov. would change this either.
     
  5. iStudentUK, Mar 31, 2012
    Last edited: Mar 31, 2012

    iStudentUK macrumors 65816

    iStudentUK

    Joined:
    Mar 8, 2009
    Location:
    London
    #5
    Remember you could have multiple winners and then the amount is split, and larger prizes will draw more people to buy tickets. So that can have an impact on your expected return.

    I haven't really ever played the lottery here, but I believe it's £1 per ticket. I believe the expected return is about 60p. So you pay £1 for a ticket 'worth' 60p. It's a fascinating game statistically! Over many years (eg millennia) you should get your 60p per week on average, but it's the enormous range in prize amounts that draws people in. Plus, there is the complication of the jackpot potentially being split, 'rollovers' can increase your expected return by adding prize money from previous weeks where you didn't play, but like I said that draws in more players, but that in turn increases the prize amount!

    The one tip is was told is if you are going to play is always include a number over 31, as that avoids the risk of splitting the jackpot with people who play birthdays. However, I still don't waste my £1. :)


    In the UK the tax is taken at source, in other words about 12p per ticket goes to the government as duty, so the prizes are tax free on payment.
     
  6. Fazzy macrumors 6502

    Joined:
    Oct 12, 2011
    Location:
    check the tracking device
    #6
    True, but in the US, taxes are done after purchase- not included into the price at purchase. So I assumed the same would be for lotto winnings aswell. I could be wrong though.
     
  7. splitpea macrumors 6502a

    Joined:
    Oct 21, 2009
    Location:
    Among the starlings
    #7
    Yes. The expected value is winnings * probability, so 640M*(1/175M) = ~$3.60.

    Even after taking the cash option of about $450M, and taxes (which are about 50% of the winnings), the expected value is about 225M*(1/175M) = ~$1.30.

    However, big jackpots like this are almost invariably split (as occurred in this case). Which decreases the utility by dividing it by the number of people it's split among. Which would make the expected value in this case less than $1.

    But... the 1/175M number is the *jackpot* probability. There are several other ways to win smaller amounts. According to the MegaMillions website, there's actually a 1/40 chance of winning at least a $2 prize.

    When the jackpots get really huge, look at playing the lottery as entertainment value. Costs less than renting a DVD, and you get to spend all week dreaming about winning. No, you'll probably never get back the money you spent, but you won't for the DVD either.
     
  8. Tomorrow macrumors 604

    Tomorrow

    Joined:
    Mar 2, 2008
    Location:
    Always a day away
    #8
    The five bucks I spent (and lost) on tickets will not change my life. Winning the jackpot would have. Regardless of the odds or expected value, that made it worth the try to me.
     
  9. iJohnHenry macrumors P6

    iJohnHenry

    Joined:
    Mar 22, 2008
    Location:
    On tenterhooks
    #9
    Ah, the "You can't win if you don't play!!" school of thought.

    But there is also "If you don't play you don't lose." Those odds are far better.
     
  10. localoid macrumors 68020

    localoid

    Joined:
    Feb 20, 2007
    Location:
    America's Third World
    #10
    Since some folks did win, you obviously didn't work hard enough at picking the right numbers. You were given the same opportunity for good fortune as they were. It's not like there's some kind of random force in the universe that determines who wins and who loses. You only have yourself to blame. Pull yourself up by your bootstraps!
     
  11. malman89 macrumors 68000

    Joined:
    May 29, 2011
    Location:
    Michigan
    #11
    As someone who played their first $3 ever on the lotto on Wednesday night, I figured, "Why not? Could be fun." I knew I wouldn't win, but it was fun following the news and it came up in conversation multiple times Friday at work.

    To trade off that $3, I made sure to bring lunch to work one extra day instead of going out for lunch. Would've spent the $3 (or more like $5-8 on lunch) anyway, so might as well do it for something entertaining.
     
  12. Don't panic macrumors 603

    Don't panic

    Joined:
    Jan 30, 2004
    Location:
    having a drink at Milliways
    #12
    actually, that is not correct.

    a good chunk of the revenue money goes to the participant states.
    In an article I read yesterday it said that 50% of the total revenue goes into the prizes (~31.8% added to the preexisting jackpot and 18.2% for the weekly minor prizes), ~6% goes to the retailer and ~44% goes to the states (who use part of it to cover the marketing costs and other expenses). in many states the profit from the lottery is earmarket for specific purposes, like education. (can't find the article now, but here is a video link to the same info

    After the prizes are won they are taxed by the federal government. The specific amount will change with the amount won, the overall income of the winner, and the management of the money -e.g. charity donations-. Roughly, ~30% will be paid in federal taxes.
    Depending on the states, they can also be re-taxed by the states as income (in NY is ~9%).

    On wikipedia, a different division of the initial revenue is reported (60% prices, 15%retailer, marketing and managing costs, 25% states), so I am not sure which one is correct.

    the ~640 MIL jackpot was ~280 mil more than the ~363 MIL jackpot from the last draw. if we take the Bloomberg numbers are correct, that means that the total revenue this time around (and the number of tickets sold) was close to 900 millions.
    it also meant that every single combination was played -on average- ~5 times (if my math is right).
    it was very unlikely that anyone would get the prize by themselves.

    i wouldn't be surprised if they soon change the game to make the odds even harder, so the chances of these huge jackpots becomes higher
     
  13. iJohnHenry macrumors P6

    iJohnHenry

    Joined:
    Mar 22, 2008
    Location:
    On tenterhooks
    #13
    Well, that's a new twist.

    Buy MegaBall tickets. It's good for your health (physical). :p
     
  14. thekev macrumors 604

    thekev

    Joined:
    Aug 5, 2010
    #14
    That's assuming an even distribution in numerical combinations. I have to wonder if it the numbers played follow such a formula.
     
  15. dukebound85 macrumors P6

    dukebound85

    Joined:
    Jul 17, 2005
    Location:
    5045 feet above sea level
    #15
    I don't play

    It is essentially a "dumb tax" that people willingly subject themselves too

    I know I will never win. Why try?
     
  16. iJohnHenry macrumors P6

    iJohnHenry

    Joined:
    Mar 22, 2008
    Location:
    On tenterhooks
    #16
    They are selling a pipe dream, sans the opium.

    Much better profit margin.
     
  17. Don't panic macrumors 603

    Don't panic

    Joined:
    Jan 30, 2004
    Location:
    having a drink at Milliways
    #17
    probably not.
    in part depends on the relative frequency of 'quickpicks' (computer generated, thus truly random) and hand picked numbers.
    people plays 'favorite' or 'lucky' numbers, which i am sure are not randomly distributed.
    I am also positive birthdays or other significant dates are played often, therefore any number 1-12 is going to be overplayed (and 1-31 to a lesser extent).
    other combination that are likely to be underplayed by hand are those that are (wrongly) perceived to be 'less likely', like 5 numbers in a row, or last week's combination, or the megaball being the same of one of the normal numbers.

    if i were to play regularly, i would play a combination of only numbers between 32 and 56 and double-up on the megaball. the chances of winning are the same, but i would bet (;)) the chances of not sharing the win (if it were ti happen) are significantly better.
    it would be very interesting to have access to the database of the numbers played :)
     
  18. iJohnHenry macrumors P6

    iJohnHenry

    Joined:
    Mar 22, 2008
    Location:
    On tenterhooks
    #18
    And what is to stop them from 'restricting' the random number generator to just a pool of the most commonly played numbers, thus increasing the chances of the pool getting larger?? We were witness to the $100M jump in the pool, in just the last day or so.

    In god we trust, all others pay cash.
     
  19. Don't panic macrumors 603

    Don't panic

    Joined:
    Jan 30, 2004
    Location:
    having a drink at Milliways
    #19
    I am sure it's technically feasible, but i'm also pretty sure that it's quite illegal.

    but i agree that they must have liked the hype, which is why i think we will see a change soon to make the odds longer. (like 60 regular balls and 50 megaballs, which would bring the odds of winning to 1 in 276 millions)
    they need the big jackpots, but not odds so high that people will play less
     
  20. EricNau Moderator emeritus

    EricNau

    Joined:
    Apr 27, 2005
    Location:
    San Francisco, CA
    #20
    I didn't play. The odds of me being killed en route to the convenience store were far greater than me winning the jackpot. That's not a game I want to play. :)

    Also, the odds of winning the Mega Millions Jackpot never change, so for me it doesn't make any more sense to purchase a ticket if the Jackpot is $640m versus $100m. Either Jackpot would change my life in practically the same way, and the odds are terrible regardless.
     
  21. CalBoy macrumors 604

    CalBoy

    Joined:
    May 21, 2007
    #21
    Technically yes, but realistically no.

    See, even though the $1 "investment" has an expected payout of 3:1, the only way to achieve real-life odds that mirror that are if you can leverage large sums of money over a long period of time, and if the prize is fixed without being divided amongst all winners.

    If you had 175 million (or so) jackpots that exceeded $175 million in value, in the long run it would be a wise investment to buy at least one ticket in each of these jackpots because the odds are that eventually one of them will payout more than what you put in.

    Of course realistically no one lives to see anywhere near 175 million jackpots, and certainly not that many jackpots that exceed the odds of winning. That means that the solitary ticket or small bundle of tickets are going to be effectively the same in overall worth as those for a smaller jackpot because as an individual you lack the ability to make the odds on paper match the limits of real life.

    The only other option is if you could buy 175 million tickets. This would be a good idea if you knew for a fact that no one else could split the winnings. Since that's always a toss-up, I say keep the lottery dollars you would spend for a snazzy new shirt or the iPad 5g.

    Although I did buy some tickets for this jackpot, the first in my life, because I thought I should experience it and figured $540+million was a good time as any :p
     
  22. EricNau Moderator emeritus

    EricNau

    Joined:
    Apr 27, 2005
    Location:
    San Francisco, CA
    #22
    This seems pretty accurate to me, no offense intended towards those who partook.

    Lotto tickets provide an escape: a few days of hope. Unfortunately, it's a vice with no payoff (for virtually all players). At least it doesn't have any direct health consequences, except for those who buy lotto tickets over food or healthcare. I'm afraid that's sometimes the case, though.

    Since proceeds go towards education (in California), it really does appear to be a "tax" on the impoverished, or those who need/seek hope the most.
     
  23. Happybunny macrumors 68000

    Joined:
    Sep 9, 2010
    #23
    Every year I buy a lot in our New Years Lottery, I've been doing this since 1985.
    Needless to say I've never won. :eek:
     
  24. MorphingDragon macrumors 603

    MorphingDragon

    Joined:
    Mar 27, 2009
    Location:
    The World Inbetween
    #24
    You don't get rich from playing the lottery. Even if you do win, its not sustainable. Without serious lifestyle changes you'll end up right where you started before winning the lottery, albeit with fancier gear.
     
  25. iJohnHenry macrumors P6

    iJohnHenry

    Joined:
    Mar 22, 2008
    Location:
    On tenterhooks
    #25
    True, but up here it's run by an agency of the government, so good luck.

    How do you like last night's Lotto 6/49 numbers drawn?

    33 35 36 39 48 49

    The odds of not having at least one "birthday" number drawn out of 6 are pretty steep. Coincidence? Perhaps. :rolleyes:

    Thanks for that info, going to the public benefit makes all the difference.

    Our Lottario (6/39) used to go to providing health care, but it did so well that subsequent governments purloined the proceeds, and applied them to their bottom line.

    You can guess my response to this little tidbit of information. ;)
     

Share This Page