Option | Amount |
---|---|
Annuity (26 yearly payments) | $356,000,000 |
Cash (1 payment) | $255,000,000 |
Tuesday's jackpot will be the 5th largest lottery jackpot in U.S. history and the 3rd largest jackpot in Mega Millions history.
Option | Taxes | $1 Game Return (No Megaplier) | $2 Game Return (w/Megaplier) |
---|---|---|---|
Annuity | Before | 220.80% | 119.14% |
Cash | Before | 163.32% | 93.27% |
Annuity | 35% federal tax withheld | 149.89% | 87.23% |
Cash | 35% federal tax withheld | 112.53% | 70.42% |
So the $1 game is a good bet no matter which prize option you take, as long as you don't have to split the jackpot if you win it. Here are the returns if you have to split the jackpot with one other winner:
Option | Taxes | $1 Game Return (No Megaplier) | $2 Game Return (w/Megaplier) |
---|---|---|---|
Annuity | Before | 119.50% | 73.55% |
Cash | Before | 90.76% | 60.62% |
Annuity | 35% federal tax withheld | 84.05% | 57.60% |
Cash | 35% federal tax withheld | 65.37% | 49.19% |
For those interested in the volatility, here you go (these figures assume a $1 bet and a single jackpot winner):
Option | Taxes | Variance | Standard Deviation |
---|---|---|---|
Annuity | Before | 721,289,225.76 | 26,856.83 |
Cash | Before | 370,082,919.01 | 19,237.54 |
Annuity | 35% federal tax withheld | 304,754,027.19 | 17,457.21 |
Cash | 35% federal tax withheld | 156,369,362.64 | 12,504.77 |
Quote: IbeatyouracesVariance is just to high to even bother. Just because its a good bet doesn't make it worth while.
I mostly agree, except for the fact that it is a life-changing amount of money. But yes, the variance is ridiculous.
... for those who live in Florida where the similarly named Mega Dollars are offered the next drawing is 500,000. So save yourself the trip to the convenience store.Quote: JBFor those of us who live in one of the 42 states that offer Mega Millions, here are the stats for Tuesday's drawing...
Quote: DJTeddyBearThis discussion reminds me of this commercial for NY Lottery / Mega Millions.
Thanks for reminding me. This one is really funny, too.
At the time I stuck to poker and BJ, though I've expanded quite a bit since then. Still, I never play the lottery, though seeing the numbers is tempting me to throw 10 out for it.
Quote: TiltpoulI never play the lottery, though seeing the numbers is tempting me to throw 10 out for it.
It's a small price for an extremely unlikely but still non-zero chance of coming into a fortune. I have a grand total of $5 invested in Tuesday's drawing.
Quote: JBIt's a small price for an extremely unlikely but still non-zero chance of coming into a fortune. I have a grand total of $5 invested in Tuesday's drawing.
Gee, another big spender bragging here. SIGH
I think the poor get so desperate sometimes that lotteries are dreams. Youths seem to mill around lotto vendors though perhaps its simply that there is no where else to go.
Still, it is a life changing amount, and it's fun to dream about what you'd do if you won . . .
Hmmm....Quote: Toes14My kids were with me when I stopped to by my tickets, and they were all excited about how much it was; asking "if we win, will you buy me a pony?", that type of stuff. They didn't care when I told them I had a better chance of getting hit by lightning than winning.
Next they're gonna ask, "If you get hit by lightning, can we use the insurance money to buy a pony?" LOL
Quote: JBSo the $1 game is a good bet no matter which prize option you take, as long as you don't have to split the jackpot if you win it.
I'm not 100% sure, but the calculated return on the annuity option does not seem to factor in 25 years of inflation.
Quote: SanchoPanzaI'm not 100% sure, but the calculated return on the annuity option does not seem to factor in 25 years of inflation.
I didn't factor it in, so probably not.
Here is an insightful article about cash vs. annuity.
Using this inflation calculator, today's value of the annuity is approximately $272,721,623. Before I used that calculator, I made my own estimate (by averaging the yearly inflation between 2000 to 2011, which was 2.47%) and applying that to the $13,692,307 payments to come up with a value of $266,832,363 in today's dollars. Both scenarios predict the annuity value to be worth at least $10 million more (in today's dollars) than the cash option of $255 million.
That said, this inflation stuff is not my territory at all. Bit-shifting to multiply or divide by a power of 2 or using XOR to swap two integers without a temporary variable is more my thing. :)
Okay. So why are rich people in silicon valley buying lottery tickets in the first place and why is someone doing so well there?
Check with our roulette fans here -- it's all a matter of study and practice.Quote: FleaStiffOkay. So why are rich people in silicon valley buying lottery tickets in the first place and why is someone doing so well there?
Quote: AcesAndEightsDo we know the probability of picking the same numbers as someone else? If you could calculate/estimate that probability, you could form an overall return percentage...somewhere between 149% and 84% for the after-tax annuity.
I think it would require knowing how many tickets are in play.
I see they increased the theoretical annuity jackpot from $356 million to $363 million. That makes it tied for 4th position as the largest lottery jackpot in U.S. history.
1. the annuity has a bit of a tax shelter effect because some of the money hits the lowest tax brackets in each of 25 years.
2. Taxes, as a weighted average, will almost certainly be higher later in the term than in year 1.
Those offset, but I think the net effect slightly benefits the annuity.
Quote: JBI think it would require knowing how many tickets are in play.
I see they increased the theoretical annuity jackpot from $356 million to $363 million. That makes it tied for 4th position as the largest lottery jackpot in U.S. history.
Last July, we looked at the EV of mega millions, and this is what I wrote:
Old' rel='nofollow' target='_blank'>https://wizardofvegas.com/forum/gambling/other-games/3918-lotto-positive-ev/7/#post83939"]Old Mega Millions Thread
At 363MM, I expect 210MM tickets to be sold. Given that you win, this table shows the frequency that you will need to share the prize with other players:
Other winners to split prize with | Probability | Split Jackpot Value (Millions) |
---|---|---|
0 | 0.30266138 | 363 |
1 | 0.361722921 | 181.5 |
2 | 0.216154884 | 121 |
3 | 0.08611183 | 90.75 |
4 | 0.025728937 | 72.6 |
5 | 0.00614994 | 60.5 |
6 | 0.001225007 | 51.85 |
7 | 0.000209151 | 45.37 |
8 | 3.12456E-05 | 40.33 |
9 | 4.14921E-06 | 36.3 |
10 | 4.95889E-07 | 33 |
This gives an estimated average prize of 211.8MM, given that you win.
This is before accounting for taxes and discounting the annuity payments.
But, I've been thinking about it and I don't think that the EV makes a difference at all. There are two outcomes: you lose a dollar or you have a life changing win. The amount of the life changing win is immaterial because the utility of money drops. My life would be largely the same if I won 20 million vs 211 million. In reality, I think I would rather win 2nd prize, so I don't have the same publicity.
Matches | winners | Odds | Tickets sold |
---|---|---|---|
5+0 | 39 | 3,904,701:1 | 152,283,339 |
4+1 | 218 | 689,065:1 | 150,216,170 |
4+0 | 9,013 | 15,313:1 | 138,016,069 |
3+1 | 9,430 | 13,781:1 | 129,954,830 |
2+1 | 142,733 | 844:1 | 120,466,652 |
3+0 | 407.708 | 306:1 | 124,758.648] |
1+1 | 823,738 | 141:1 | 116,147,058 |
0+1 | 1,486,127 | 74.8:1 | 111,162,300 |
All prizes about 1:39.89. Total prizes won = 2,879,006. Tickets sold then would be 114,839,559.
I suspect that we'll hit well over 200,000,000 tickets sold for this draw.
Quote: boymimboLast week, the prize distribution was:
Matches winners Odds Tickets sold 5+0 39 3,904,701:1 152,283,339 4+1 218 689,065:1 150,216,170 4+0 9,013 15,313:1 138,016,069 3+1 9,430 13,781:1 129,954,830 2+1 142,733 844:1 120,466,652 3+0 407.708 306:1 124,758.648] 1+1 823,738 141:1 116,147,058 0+1 1,486,127 74.8:1 111,162,300
All prizes about 1:39.89. Total prizes won = 2,879,006. Tickets sold then would be 114,839,559.
I suspect that we'll hit well over 200,000,000 tickets sold for this draw.
I think you're right. And Friday 3/30 could be absolutely huge if the jackpot isn't won tomorrow night. That day is a payday two ways, plus it's in the heart of tax season. Yikes!
Quote: Toes14My kids were with me when I stopped to by my tickets, and they were all excited about how much it was; asking "if we win, will you buy me a pony?", that type of stuff. They didn't care when I told them I had a better chance of getting hit by lightning than winning.
Still, it is a life changing amount, and it's fun to dream about what you'd do if you won . . .
I hate when people say "you have a better chance of being hit by lightning than winning the lottery"
How many people die by lightning strikes each year? Google says about 60. How many people win 1 million dollars or more in the lottery every year? Wayyyyyyy more than 60.
Can we put this to bed finally?
Quote: FinsRuleI hate when people say "you have a better chance of being hit by lightning than winning the lottery"
How many people die by lightning strikes each year? Google says about 60. How many people win 1 million dollars or more in the lottery every year? Wayyyyyyy more than 60.
Can we put this to bed finally?
Yes. Let's switch it.
"Honey, don't go golfing today! There's a 90% change of thunderstorms."
"Don't worry. I have a better chance of winng the lottery than getting struck by lightning."
Quote: ChesterDogYes. Let's switch it.
"Honey, don't go golfing today! There's a 90% change of thunderstorms."
"Don't worry. I have a better chance of winng the lottery than getting struck by lightning."
Ok, on a day when there is lightning in the forecast, you have a better chance of being struck by lightning than winning the lottery. My point is still valid however.
making the odds about 313,000:1
so that would be the better bet than the mega millions...
with that being said, i bought the winning ticket today
Quote: WongBoabout 1000 people get struck by lightning in a year in the US
making the odds about 313,000:1
so that would be the better bet than the mega millions...
with that being said, i bought the winning ticket today
I'm not so sure. There are 104 MM drawings per year. If I buy 20 tickets per drawing for one year...
Now would I buy a ticket? If I were in a state where I could get one, yes.
Would I stay out on the greens holding a metal golf club in a storm? No.
Quote: WongBoabout 1000 people get struck by lightning in a year in the US
making the odds about 313,000:1
so that would be the better bet than the mega millions...
with that being said, i bought the winning ticket today
If the question is, which is more likely, winning Mega Millions, or being struck by lightning, the odds are going to be lightning unless you buy a lot of tickets.
But if the question is, which is more likely, winning one million in the lottery, or being struck by lightning, the odds are lottery.
Quote: WongBobuying twenty tickets does not reduce the odds by a factor of twenty, as MANY people seem to think...
Please explain this to me.
If a lottery is drawing one number between 1 and 100, and I have bought 20 tickets, how are my odds of winning not 1 in 5?
Quote: FinsRuleIf the question is, which is more likely, winning Mega Millions, or being struck by lightning, the odds are going to be lightning unless you buy a lot of tickets.
But if the question is, which is more likely, winning one million in the lottery, or being struck by lightning, the odds are lottery.
It also depends on where you live and where you spend most of your time. If you live in Vegas you're less likely to be struck by lightning than if you live in Alabama or Florida. Also if you live in Vegas, you're less likely to be able to purchase lottery tickets at all :)
Finally after watching some of the draw videos, I realized that the order of the numbers isn't important, and they just re-order them from smallest to largest for the quick picks and when reporting the winning numbers. And here I thought you had to match everything in order to win the jackpot! I feel a little silly now, considering the math involved in that procedure would require a much, much, MUCH larger jackpot for it to be +EV.
Good luck, all.
Quote: JBI am the proud owner of one of the 2,533,874 tickets that won $2.
Hey me too!
40 bucks got me one $2 winner. The other 3 investors now only owe me $9.50 instead of $10. Wooo!
For the drawing on Friday, I will probably just drop $100 of my own money. Eff that sharing stuff!
I sure wish I lived in a Mega Millions state.Quote: bushmanNo jackpot winners. Estimated 476 million on Friday. Wow.
Quote: ewjones080Why is the differential between cash and annuity so small, while the annuity is like 3X as much as the cash for a big prize for the Powerball?
The difference is so small because the interest rates are so low. Cash value used to be 1/2 the annuity in the past, but the lottery can't earn those rates now on an annuity. I would suspect that this mega millions jackpot would be the largest ever if (if it isn't already) if the interest rates were higher.
Quote: ewjones080Why is the differential between cash and annuity so small, while the annuity is like 3X as much as the cash for a big prize for the Powerball?
Read this: http://www.megamillions.com/faqs/#16. The main reason is Mega Millions is over 25 years and always the same amount per year. Powerball is over 29 years and payments increase by 4% each year.
Quote: boymimboThe numbers are 9, 19, 34, 44, 51 megaball: 24.
Good luck, all.
LOL, I bought $5 worth of Quick-Picks...
One of my QP's was: 10, 20, 25, 45, 55 and MEGA of 25...LoL..one number off all the way huh?
With 47 prizes at 250,000, that megabill was surely elusive!
The odds of 0 winners (k) given that 188,104,000 tickets (n) were sold and the odds of winning are 175,711,536:1 (o) can be expressed as:
combin(n,k)*((1/o)^k)*(((o-1)/o)^(n-k))
0 0.342827594
1 0.3670064
2 0.196445238
3 0.070100015
4 0.018761
5 or more: 0.0048598
I'm in SoCal this week so will have to pick up my lotto tickets here. I think I won at least $2 with the set I bought on Sunday, but the tickets are in my car, and my car is at YYZ so I won't know until I get home.
Quote: Hollywood12I look at math when gambling, but also common sense and sometimes math and common sense dont add up to 1.
Yes. Its similar to that dealer who when asked about some side bet replied "Its a sucker bet, but its only a dollar and if it hits and you didn't bet on it, you will never hear the end of it from your wife". That is the way the casino can offer sucker bets to someone who knows math! Have a dealer who reminds him its only a dollar and who also reminds him that his wife will nag him all night long about it.
Lotteries are pretty much the same way. They get people to make sucker bets by offering the illusion of untold wealth. Everyone buying a one dollar ticket dreams of his 300 foot yacht. Some know the odds some don't but the illusion is still there. And its only a buck!