Another Lottery Post

Well, here i am with another late post (that i should have done when the Powerball jackpot was near $500 million).  i guess this would be considered a little late to the party (or LTTP, i just figured out what that meant).



i'm sure a jackpot will be up in that stratosphere (or at least over the odds) within 6 months.

There was an article at the Business Journal that i found, in which the author breaks down the expected value (a concept i kind of like) for a lottery ticket at that amount
http://www.businessinsider.com/powerball-expected-value-2015-2

In the article (or wet blanket), the author states that it is not worth buying a ticket.  Of course, his concept of worth is hard numbers (or at least semi-hard).  He covers (sort of) lump sums, taxes and multiple winners impacting the payout.

Now, what did i not exactly like:
* His methodology of using a payout - ticket cost instead of straight payout.  Why didn't i like this?  MegaMillions most common prize would be messed up by it (in other words $1 winning - $1 payout) would mess up the expected value - as far as i see it (something times zero).

* Taxes: i think he overestimates the impact (but i come from a no income tax state).  Federal withholding is stated at 25% for gambling (you don't really have to report winnings under something like $600).

* There is another article out there (from a while ago) showing a graph of expected winners based off of the jackpot size (that was kind of interesting).
 http://www.businessinsider.com/heres-when-math-says-you-should-start-to-care-about-powerball-2013-9

* Overvaluing the annuity (non-cash option):  in my mind, i would always go with the lump sum.  Why?  Well, 30 years is a really long time (what good is money to you at a future date if you may not be alive to see it?).  True, it does reduce your expected value.  i am expecting a lot worse in 30 years than most (and would rather have the money today - some to use as a hedge against inflation).  i expect $200 million in 30 years to have the purchasing power of $20 million today.


* Viewing the lottery (or gambling) in investment type terms is a bit of a stretch.  i view the lottery as an entertainment expense with a low opportunity cost (what else can you buy anymore with $2? - i prefer MegaMillions at $1 though).  Is there even anything at the movie theatre that is that low? Sometimes i view it as a sanity keeper (feeling depressed, dream for a couple of days/drawings that something actually could go right).  Do i spend more than i should on the lottery? Probably (but i have a budgeted amount and i haven't gone over it in at least 3 years).  1 or 2 dollars here or there can add up over the course of a year though.  

i like to use Jackpot vs odds (if the jackpot is bigger than the jackpot odds) to buy i ticket - in theory.  In reality it is more complex (when i feel deluding myself to think i could win, when it is Friday the 13th or a weird date, etc) - i also like to play 2 or more drawings in advance.