4 ms·

Free YC 2016 application: Build website to crowdsource $292,201,338. Buy all the lotto tickets. Pay back investors 150% of their investment. Make ~ $69.5M. (a

by aus_ 11y ago

Free YC 2016 application: Build website to crowdsource $292,201,338. Buy all the lotto tickets. Pay back investors 150% of their investment. Make ~ $69.5M. (assuming lotto tickets are a $1) (someone else can figure out the break even point after taxes)

johnpowell 11y ago
Hope someone else didn't win cutting the prize in half.
cookiecaper 11y ago
Don't forget the risk that there may be multiple winners, which would require splitting the jackpot.
- pc86 11y ago
  It's not called Venture Capital for nothing.
jonlucc 11y ago
I imagine you'd have to crowdsource the purchasing as well. Asking a clerk to spend several days printing tickets might put them off.
KingMob 11y ago
Something like this happened in Virginia in early 1992. At a certain point, the jackpot/(cost of buying all numbers) ratio was high enough that an Australian business group swooped in, hiring volunteers to purchase as many tickets as possible. They only managed to cover 5 million out of 7 million possibilities (ran out of time), but they still won the lottery, winning a $27 mil jackpot.
- malbs 11y ago
  It's a genuine scalability problem when you have to work out how to physically print/place that many tickets, and the mechanism by which you distribute the jobs up to all of your volunteers (are they volunteers if they're being paid?)
malbs 11y ago
Also an extra edge to get you over the line - make sure you have a license to sell the tickets to yourself. Usually the vendors (newsagents, shops) etc that sell the tickets get a commission on each ticket ranging from 2% - 10% It's the real free money part!
node-bayarea 11y ago
Even then don't you still have only 50% chance of winning as none of those numbers might get picked?
dreaminvm 11y ago
Would not work unless it ballooned into 10 figures. Lump sum taxes would take most of the gains away and that assumes you are the only winner.
- LordKano 11y ago
  Each ticket you purchase is an expense that will reduce your tax liability. If you spent $500 million on tickets and won $800 million, your tax liability would only be on the $300 million profit.
- woobar 11y ago
  And the advertised Jackpot isa 30 years annuity. The lump sum is ~62% of the advertised Jackpot before taxes.
  - Wingman4l7 11y ago
    Used to be, the lump sum wasn't offered -- you had to sell your legal rights to the annuity to an investor to get it. You could still do this -- perhaps have open bidding on it; might net more than 62%.
dlib 11y ago
Famously, something akin to this was done by Voltaire in 1729 (including the crowdsourcing). See https://books.google.com/books?id=BBusxgu8-AAC&lpg=PA259&vq=lottery&pg=PA260#v=onepage&q&f=false https://books.google.com/books?id=BBusxgu8-AAC&lpg=PA259&vq=...
ecdavis 11y ago
Alternatively: a double or nothing scheme. Crowdsource ~$146 million and only buy half the lotto tickets. For each of the ~11 million combinations of regular numbers, buy 13 tickets covering half the possible powerball numbers. Assume you win the $800 million jackpot and lose 50% to taxes, you have $400 million left over. You spend ~$292 million to double your investors money and have ~$107 million left over. Assume you don't win the $800 million jackpot, you still have 13 $1 million tickets left over. You can either pay that back to your investors, or keep it for yourself and point to a clause in a contract they signed saying that you'd only pay out if you won the jackpot. Somehow I doubt it's legal to do something like that, but it's interesting nonetheless.
- LordKano 11y ago
  Assume you win the $800 million jackpot and lose 50% to taxes, you have $400 million left over. Gambling losses are tax deductible as expenses against gambling winnings. Going with your scenario, if you spend ~$146 million and win ~$800 million, you'll be taxed on the ~$654 million profit. Off the top of my head you're looking at ~$400 million in after tax winnings. So the investors get their ~$146 million back and then take a share of the remaining ~$400 million.

by aus_ 11y ago

johnpowell 11y ago

Hope someone else didn't win cutting the prize in half.

cookiecaper 11y ago

Don't forget the risk that there may be multiple winners, which would require splitting the jackpot.

pc86 11y ago
It's not called Venture Capital for nothing.

jonlucc 11y ago

I imagine you'd have to crowdsource the purchasing as well. Asking a clerk to spend several days printing tickets might put them off.

KingMob 11y ago

Something like this happened in Virginia in early 1992. At a certain point, the jackpot/(cost of buying all numbers) ratio was high enough that an Australian business group swooped in, hiring volunteers to purchase as many tickets as possible. They only managed to cover 5 million out of 7 million possibilities (ran out of time), but they still won the lottery, winning a $27 mil jackpot.

malbs 11y ago
It's a genuine scalability problem when you have to work out how to physically print/place that many tickets, and the mechanism by which you distribute the jobs up to all of your volunteers (are they volunteers if they're being paid?)

malbs 11y ago

Also an extra edge to get you over the line - make sure you have a license to sell the tickets to yourself. Usually the vendors (newsagents, shops) etc that sell the tickets get a commission on each ticket ranging from 2% - 10% It's the real free money part!

node-bayarea 11y ago

Even then don't you still have only 50% chance of winning as none of those numbers might get picked?

dreaminvm 11y ago

Would not work unless it ballooned into 10 figures. Lump sum taxes would take most of the gains away and that assumes you are the only winner.

LordKano 11y ago
Each ticket you purchase is an expense that will reduce your tax liability. If you spent $500 million on tickets and won $800 million, your tax liability would only be on the $300 million profit.
woobar 11y ago
And the advertised Jackpot isa 30 years annuity. The lump sum is ~62% of the advertised Jackpot before taxes.
- Wingman4l7 11y ago
  Used to be, the lump sum wasn't offered -- you had to sell your legal rights to the annuity to an investor to get it. You could still do this -- perhaps have open bidding on it; might net more than 62%.

dlib 11y ago

Famously, something akin to this was done by Voltaire in 1729 (including the crowdsourcing). See https://books.google.com/books?id=BBusxgu8-AAC&lpg=PA259&vq=lottery&pg=PA260#v=onepage&q&f=false https://books.google.com/books?id=BBusxgu8-AAC&lpg=PA259&vq=...

ecdavis 11y ago

Alternatively: a double or nothing scheme. Crowdsource ~$146 million and only buy half the lotto tickets. For each of the ~11 million combinations of regular numbers, buy 13 tickets covering half the possible powerball numbers. Assume you win the $800 million jackpot and lose 50% to taxes, you have $400 million left over. You spend ~$292 million to double your investors money and have ~$107 million left over. Assume you don't win the $800 million jackpot, you still have 13 $1 million tickets left over. You can either pay that back to your investors, or keep it for yourself and point to a clause in a contract they signed saying that you'd only pay out if you won the jackpot. Somehow I doubt it's legal to do something like that, but it's interesting nonetheless.

LordKano 11y ago
Assume you win the $800 million jackpot and lose 50% to taxes, you have $400 million left over. Gambling losses are tax deductible as expenses against gambling winnings. Going with your scenario, if you spend ~$146 million and win ~$800 million, you'll be taxed on the ~$654 million profit. Off the top of my head you're looking at ~$400 million in after tax winnings. So the investors get their ~$146 million back and then take a share of the remaining ~$400 million.