3 ms·

Powerball tickets have negative EV after taxes, but I’m willing to spend a grand total of about $20 a year on them by playing when the jackpot is north of half

by User23 5y ago

Powerball tickets have negative EV after taxes, but I’m willing to spend a grand total of about $20 a year on them by playing when the jackpot is north of half a billion. Because the $20 loss has absolutely no effect on my quality of life, but the win would.

HWR_14 5y ago
That's just measuring the EV in Utils as opposed to Dollars.
fallingknife 5y ago
Typically, when the jackpot is up in that range, the tickets actually have a positive EV.
- wbc 5y ago
  Super unlikely, the main reason is at that point many people buy tickets and it becomes more and more likely the jackpot is split between multiple winners [0]. Actually the largest Powerball at $1.586 billion was split between 3 people [1] [0] https://chance.amstat.org/2020/02/lottery-ticket/jackpots-ever-get-big-enough-that-playing-has-a-positive-expected-value https://chance.amstat.org/2020/02/lottery-ticket/jackpots-ev... [1] https://apnews.com/article/archive-6d98eff765c9e2f4b683671311fe5b8b https://apnews.com/article/archive-6d98eff765c9e2f4b68367131...
  - fallingknife 5y ago
    Odds of winning are 1 in 292 million. So unless the odds were that the jackpot would be split 6 ways or more the tickets have a positive EV.
    - listenallyall 5y ago
      Except that Powerball tickets cost $2 each, not one dollar as you were assuming. (And of course, taxes)
      - fallingknife 5y ago
        Yeah good point. Also delayed payout / lump sum discount.
laurent92 5y ago
Isn’t that a “gateway drug” effect? I’m similarly afraid of sometimes having wine alone, because I know it’s addictive.
- Nbox9 5y ago
  Gambling has a similar distribution to most markets. 20% of the gamblers generate 80% of the gambling revenue. Most people that gamble don’t ruin their life. Most people that drink don’t ruin their life/health. There’s some ethical concerns where the gaming industry (and liquor industry) will market more towards problem users or in ways to generate more problem users, but buying $20/lotto tickets a month isn’t a guaranteed start of a problem, nor is having wine alone sometimes.

by User23 5y ago

HWR_14 5y ago

That's just measuring the EV in Utils as opposed to Dollars.

fallingknife 5y ago

Typically, when the jackpot is up in that range, the tickets actually have a positive EV.

wbc 5y ago
Super unlikely, the main reason is at that point many people buy tickets and it becomes more and more likely the jackpot is split between multiple winners [0]. Actually the largest Powerball at $1.586 billion was split between 3 people [1] [0] https://chance.amstat.org/2020/02/lottery-ticket/jackpots-ever-get-big-enough-that-playing-has-a-positive-expected-value https://chance.amstat.org/2020/02/lottery-ticket/jackpots-ev... [1] https://apnews.com/article/archive-6d98eff765c9e2f4b683671311fe5b8b https://apnews.com/article/archive-6d98eff765c9e2f4b68367131...
- fallingknife 5y ago
  Odds of winning are 1 in 292 million. So unless the odds were that the jackpot would be split 6 ways or more the tickets have a positive EV.
  - listenallyall 5y ago
    Except that Powerball tickets cost $2 each, not one dollar as you were assuming. (And of course, taxes)
    - fallingknife 5y ago
      Yeah good point. Also delayed payout / lump sum discount.

laurent92 5y ago

Isn’t that a “gateway drug” effect? I’m similarly afraid of sometimes having wine alone, because I know it’s addictive.

Nbox9 5y ago
Gambling has a similar distribution to most markets. 20% of the gamblers generate 80% of the gambling revenue. Most people that gamble don’t ruin their life. Most people that drink don’t ruin their life/health. There’s some ethical concerns where the gaming industry (and liquor industry) will market more towards problem users or in ways to generate more problem users, but buying $20/lotto tickets a month isn’t a guaranteed start of a problem, nor is having wine alone sometimes.