Powerball

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I know that Powerball is a game, so perhaps not the right forum, but I do want to have a serious discussion about an aspect of it, as at the very least we're talking about serious money.

To state up front: I don't play Powerball. I've never purchased a Powerball ticket. I remember when I was a kid my grandmother asking me to pick the numbers on her ticket, but as for actually buying the tickets myself as an adult, I don't do it.

Secondary note: I don't play because the odds are so astronomical. (And are completely independent of the number of people playing and the jackpot. Twice as many people playing doesn't change your odds, it just increases the odds that more than one person hits the jackpot.) I have nothing against gambling in and of itself. Be it a football pool, sports book, poker, blackjack, or even just slots. I'm a man of many vices, and there's a lot worse ways to spend an evening than in a casino in Atlantic City. (Sadly, still no sports books in AC, but still a good time.)

Here's the concept I have difficulty understanding. There are a whole ton of people out there - likely some that post on these boards - that rushed out yesterday to purchase tickets prior to the Powerball drawing last night, because the jackpot was going to be $500 million. Many of these people would not normally buy the tickets, but did in this instance because of the total you can win.

I don't get it. At all. Specifically the statement "I only play Powerball once the jackpot gets over $XXX million." $100 million is the most commonly cited threshold for when you hear these people say they will play. Why? My opinion is that if you decide you want to spend your money purchasing Powerball tickets, you should do so every week. (And, to be fair, there are people in this category as well.)

My reasoning for this is quite simple. Say you hit a small Powerball jackpot and walk away with "only" $20 million. Would that not be a life-altering sum that would allow you and yours to live comfortably for the rest of your lives? The only decision you may want to consider in the case of a $20 million jackpot is whether or not you want the lump sum (and get a one-time check for $10 million), or get 20 $1 million checks over the course of the next 20 years. That would be something I'd have to think about, as my initial thought would be that with some wise investment strategies, that $10 million may actually be worth more than $20 million in 20 years.

So why does that other mindset exist? Are there actually people out there who would say that $20 million isn't worth the cost to play, but it suddently becomes worthwhile at $100 million? And keep in mind what I said above - the number of people who play, and the amount of the jackpot have no bearing on your odds of winning. So you could argue that the payoff is larger for the same amount of risk, but that's a very strange mental analysis to perform - you're willing to spend $10 to win $100 million, but the return on investment isn't favorable enough for you if the payoff is only $20 million?

 

It's certainly true that you can't win if you don't play. My point is that there aren't any small jackpots. Worst-case scenario is several million dollars. You're moving up several income levels no matter the specific amount. Just saying that if you can't fulfill most of your monetary dreams for $20 million, you got some expensive taste!

 

^ I think that's basically it for most people, though I suspect your average Joe lottery player may not be all that analytical. e.g. if they stopped to think about it, it might dawn on them, but they don't stop to think about it.

I don't ever play either. Don't they say you've got a better chance of being randomly eaten by fire ants or something?

 

I play via a group of 12 people through work. We always, play, no matter what the pot is. Isn't the minimum P-Ball $40 million? Not sure about Mega-Millions or any of the other big ones...

 

I've always thought this myself Aldeth with the UK lotto. Here we have a couple of different lotteries but the main ones are the lotto and the Euromillions. Each have 2 draws per week, lotto on a wednesday and saturday and euromillions on a tuesday and friday. Lotto is £1 per ticket, euromillions is £2 per ticket.
The euromillions gives you the chance to win £20mil+ the highest jackpot (after 14 rollovers) was £161,653,000. lotto gives you the chance to win 2.5mil+ the highest for this lotto was £42mil and was split between 3 tickets.

Seeing people rushing out to buy tickets because its rolling over baffles me, like the normal prize isn't enough???

 

Yeah, the fascinating thing about your question is that the exact same behaviour happens with the New Zealand powerball. Except the number are much much smaller. The biggest it ever gets to is maybe $20m, so the jackpot threshold where people start getting excited and buying tickets is about $6m.

So that means that the driver of behaviour is not some logical calculation of the benefit of winning a certain figure, because the benefit is the same no matter what country you live in, but more to do with "wow, this is a much bigger jackpot than normal, I'd better get in".

If your powerball regularly hit the $1billion mark, maybe the excitement threshold would be $400m instead?

Interesting stuff, human psychology.

 

We have megamillions and powerball. Mega costs $1 to play and has the same odds of winning the jackpot as the powerball, which costs $2. I play mega regularly - $12 million minimum jackpot is good enough for me. I play powerball only when the pot is big because I'm too cheap to put down $2 twice a week.

I read somewhere that even though the odds of winning a jackpot are low (powerball is 1 in 175 million), one in ~30,000 households in the US have won a jackpot.

May the odds be ever in your favor.

 

I thought it was equal to the chance of being killed by a falling plane that was struck by lightning.

Right, but with Powerball, I don't think there's a means of winning only a million or two. Blades suggests the minimum is $40 million. (I have no idea but I'm willing to take his word for it.) So that means even if it's the minimum, and two people win, and you take the lump sum option, you're walking away with $10 million.

As an aside, I agree with your assessment of the jackpot though. Winning a couple of million dollars wouldn't be enough to retire. My expected earnings over the rest of my career (unless I meet an untimely demise, probably around 30 years) likely will exceed a couple of million dollars, and I don't think I'm going to be comfortable on that income, so yes, it would need to be around $10 million dollars.

Now that is interesting. Hmmm... With two drawings per week, that's 104 winners every year. With a US population around 310 million, I'd guestimate we're talking somewhere between 100 million and 150 million households. Let's say in addition to powerball, that every state has a lotto system specific to that state that also allows you to win a jackpot of many millions. So now we have 104 * 51 = 5304 jackpots per year. If there are 150 million households, that works out to one winner per about.... 28,281 households! Granted, there typically are NOT two winners every week, and oftentimes the jackpot rolls over. But given that lottery systems have been around for YEARS, one winner per 30,000 households doesn't seem that far-fetched.