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This method helps to improve the expected value from a lotto ticket (though it's still far less than the ticket price), but I'm curious what happens if someone
by dkokelley 11y ago
This method helps to improve the expected value from a lotto ticket (though it's still far less than the ticket price), but I'm curious what happens if someone purchases one of every combination. I hear that the odds of winning are something like 1 in 292 million. If it's only $2/ticket, isn't it nearly a sure thing to buy 292 million sequential tickets? Aside from splitting the jackpot with others, your expected outlay is $584 million, and your return is ($1.5 billion)/(number of winners). As long as there are < 3 winners, your expected return is 1.5-3x your investment.
Aside from the feasibility of buying/tracking 292 million tickets and the risk of > 3 winners, am I missing anything?
- ck2 11y ago$1.5B is only if you take the payments. It's something like $900 million lump sum.
- MatthaeusHarris 11y agoUnfortunately, yes. Present value of a future annuity (taking the lump sum now cuts the jackpot by quite a bit), and taxes. For ballpark calculations, I assume that each is going to cut the advertised jackpot in half. So for a $1.5 billion jackpot, your expected return is going to be a around $375 million (plus every single other prize, but that just adds about $20 million to the total), assuming no other winners. Yes, your strategy will work, but not until the jackpot reaches even more ludicrous heights.
- micwawa 11y agoIs the tax something that a hedge fund with offshore shell companies and other active investments could work around?
- irixusr 11y agoI seem to recal that Canada doesn't tax winnings. And there's a better strategy then playing every number; play only the numbers that are not likely to cause a collision. You might not an every time, but you'll increase EV
- tempestn 11y agoCanada doesn't tax winnings in games of chance. If you're seen to be operating a business though - a professional poker player for instance - the winnings will be taxed. Buying all the numbers to a lottery with an expected profit could definitely fall under that umbrella.
- bryanlarsen 11y agoUnder that scenario, you'd be able to deduct the cost of the tickets as a business expense.
- tempestn 11y agoTrue. Would still reduce your net profit though. (And if your plan fails and you don't make a profit, I can just about guarantee they won't allow it to be classified as a business with deductible losses.)
- aqme28 11y agoTaxes, for one.
- cornellwright 11y agoIf I remember right (and IANAL) you can deduct gambling losses from gambling winnings (but not ordinary income), so you'd only be paying tax on difference.
- deleted 11y ago[deleted]
- kgrin 11y agoThe feasibility of buying 292 million tickets (as you mention) is a key barrier: many lotteries (Powerball included) explicitly and deliberately require that tickets must be bought in person. So, just as a matter of time constraints, you'd need a (nontrivial) army. Rough ballpark: 300 million combos - let's say you buy 6000 tickets/hour (which I think is actually optimistic probably by a full order of magnitude), for 25 hours a day (assume shifts and magic days), you're still looking at 2,000 person-days.
- ethbro 11y agoOr essentially, running a Bitcoin mining pool in real life.
- tbyehl 11y agoIt has been attempted on a lottery where only ~7 million tickets needed to be purchased, but they only managed to buy ~5 million. http://www.nytimes.com/1992/02/25/us/group-invests-5-million-to-hedge-bets-in-lottery.html?pagewanted=all http://www.nytimes.com/1992/02/25/us/group-invests-5-million...