The big Powerball jackpot got me wondering: there’s often speculating about someone with sufficient capital buying all possible number combinations in a big lottery. Ignoring the wisdom of doing such a thing, is it actually possible? Do the major lotteries make you buy each number individually, or can you just hand them a check and guarantee a share of the big jackpot?
There are over thirty-five billion combinations and the tickets cost two dollars apiece. I guess if you offered the government a valid check for seventy billion dollars, they’d sell you one of each possible ticket.
As I understand it, the cost of buying up all the combinations for a lottery might exceed the size of the jackpot itself - and even if not, the lottery is funded by the ticket sales, so if you bought up all combinations, the jackpot would simply consist of…the money you just gave them, now being given back to you. (Someone correct me if I’m way off here.)
I am also quite sure that if you tried to do that - hand the lottery officials a check to make yourself the guaranteed winner - they would reject you for fear of the terrible PR blowback and maybe even legal consequences.
Why are the odds of winning one in 292 million if there are 35 billion+ possible combos? I’m sure it works mathematically, but am confused.
You could buy every single combination of numbers and still not take home the entire jackpot, because others are still allowed to buy tickets and could come up with the winning numbers also.
There are 35 billion possible ways to choose 5 white balls and 1 red ball if the ordering of the numbers matters. In Powerball, it doesn’t matter - if you pick 1 2 3 4 5 and the balls are drawn in the order 5 4 3 2 1, you’ve still matched all 5. (In other words, Powerball deals with combinations, not permutations.)
There are 11,238,513 ways to select 5 different numbers from 69 choices (for the white balls) and 26 ways to select the red Powerball.
11,238,513 x 26 = 292,201,338.
Note that you could, in theory, write a check for twice that amount - about $584,000,000, to buy all the possible combinations. You’ll definitely win the jackpot but the problem is twofold:
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You have to pay taxes on your winnings, and
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Someone else might ALSO win the jackpot.
And, as a previous poster speculated, it’s possible buying all those tickets would just increase the jackpot by a significant amount, meaning you’ll still come out behind, but I’m not sure how that works (how ticket sales contribute to the jackpot).
Yes, the jackpot would increase substantially if you did this, compared to what it would have been if you hadn’t played at all.
The jackpot consists of a percentage of the money you contributed PLUS a percentage of the money all the other players contributed PLUS any rollover amount.
In all US state lotteries (that I know of), players are allowed to buy duplicate numbers. So it wouldn’t be just your own money you’d be winning, it would be everyone else’s money, too.
But the important thing is the rollover jackpot. The big lotto drawings can go months without having a winner. And the jackpots roll over from drawing to drawing. When you have a big rollover amount is when the strategy of buying all the numbers (if that were physically possible) could pay off. But, big rollover jackpots do all draw more players, which increases the chances that you would have to split the jackpot with multiple players, which could work against you.
Increasing the jackpot is a GOOD thing if you win. (Would you rather win $1,000,000 or $2,000,000?) Yes, every ticket you buy increases the jackpot. Increasing the jackpot means you’ll win more money, if you have the winning number.
The only downside is if other players learn that the jackpot has increased. In that case they will buy more tickets and the odds you’ll have to split the jackpot increase. So, buy the 11,000,000 tickets at the last minute so other players don’t find out.
For federal income tax purposes, gambling losses are an itemized deduction (to the extant of gambling winnings in the same tax year). They do not have to be added back for AMT purposes and are not subject to the 2% of AGI limit. But since the gambling winnings will increase your AGI, you may run up some costs for various tax breaks that depend on your AGI.
And if you buy $192,000,000 of tickets on December 31, but win the lotto drawing on Jan 1, you are SOL in deducting the cost of the tickets (unless you also had a lot of other gambling winnings the previous year).
Some states do not allow you to deduct gambling losses when calculating state taxes. So you might get hit there.
Here’s a newspaper article about a group that did just that for a particular state lottery. It’s an interesting economic game, weighing the reward against the clerical costs of buying all the tickets, risk that someone else will try the same thing, risk of a “normal” winner, etc.
MINUS the money taken off the top by the state. Lotteries are fundraisers, so the state gets its cut first. If you bet a million dollars, only around 500k goes into the jackpot.
Checks often are not accepted, nor credit cards. In my state it must be cash.
Note that the syndicate still had to buy individual tickets. They didn’t hand the government money and say “cover everything.” Because of this limitation, they managed to buy only 5 of the 7 million combinations.
Trying to buy 292 million would be exponentially harder physically. Virginia talked about limiting bulk sales because of this experience. What the current bulk sales rules are I don’t know.
But the OP’s scenario of just buying all the numbers with a check is impossible for many reasons.
It was done with a Florida state lottery once. I think only 5 numbers were needed to win that lottery, and the jackpot had built up over many weeks without a winner. They failed to purchase every number combination, they were mainly buying tickets from Publix markets as I recall, and they tied up all the machines in the stores and some of the individual stores didn’t go through with an agreement to sell the high volume of tickets so they could serve their regular customers. I believe it was an Australian syndicate, maybe the same group that tried it in Virginia. In the Florida case they won, but they took a risk because they could buy every number, and there could have been multiple winners that they’d need to split the prize with.
I said “a percentage of the money.” While I understand that theoretically that could be 100% of the money (or even 200%), I think most reasonable people would understand that this means less than 100%. So, I stand by my original statement that “The jackpot consists of a percentage of the money you contributed PLUS a percentage of the money all the other players contributed PLUS any rollover amount.” But, for the literalists, I add that the percentage is more than 0 and less than 100.
The difference between the percentage put into the jackpot and the cost of the ticket goes to cover lottery expenses and to make the sponsor a profit.
Indeed. The lottery operators have no incentive to make this easy or respectable, since it transfers money from their usual customers (who bet even when the game has negative expected value, which is the whole point) to outsiders. They certainly don’t want to help the syndicate reduce its clerical costs.
I wonder how much Australians were able to automate their ticket purchases. Like, the article says one store was selling 2400 tickets/hour, which seems faster than anything manual; but it also says the slips were hand-written, so maybe they just had a lot of separate operators and terminals?
Some previous threads on this subject.
In short, it’s possible but very difficult and almost certainly unprofitable. You do have to physically purchase every combination, which requires teams of thousands of people. Neglecting any payment you give to them, you still have to hope nobody else hits the jackpot, which drives down your winnings.
It’s not clear how many people the Australians had in Virginia, but I’ll bet it was much less than thousands. They seem to have made special arrangements with the lottery retailers (and did, in fact, pay by cashier’s check…), which probably drove their clerical costs down significantly.
I can’t help suspecting that afterward, the lottery operators applied some pressure on their retailers not to help with a stunt like that in future, even if it all was perfectly legal.
In no way would it improve your payback odds against input. What it does do is to give you control over the payout, so you’re not throwing money away on a chance to win a great deal more than you could possibly have any use for.
The simple question is, would you rather have once ticket to win a billion, or a thousand tickets to win a million, or a million tickets to win a thousand, at a fixed cost of two bucks? With a share in a jackpot pool, you can choose the amount you would need in order to make participation attractive, and then maximize your chances of winning that limited payout. Then just buy into a pool that offers your target sum to each winner, with a correspondingly higher chance of winning…
I don’t understand why anyone thinks this is profitable.
Suppose you buy all the tickets in a Lottery and nobody else does.
Now you win all the prizes - but they are only worth (say) 50% of the money you paid in, because of taxes and lottery costs.
If you hope to win in a rollover week, what happens if you hit another rollover week?
Now you’ve lost a lot of money…