I am sure you all are going to laugh at this, but I actually stopped playing the big lotteries because the odds got worse.*
Case in point for Power-ball: In 2011, each 1 dollar ticket gave you 1:195,249,054 odds of winning. In 2018, each 2 dollar of ticket gives you a 1: 1:292,201,338 odds of winning. So if you spend the same amount of money your odds of winning are like 3 times worse.**
I know you are asking “Hermitian, when the odds numbers are that large, what difference does it make?” Well, the difference is that there are way fewer winners. Having more people win more often makes me feel like that could happen to me.
Think about it though. If I told you 10 people in your large group can each win $100M or only one person will win $1B, which would you prefer? You’d have to be stupid to pick the option of only 1 winner. For very large monetary values (>50M), more winners is way better than even larger monetary values.
I know, the masses apparently don’t agree. I just thought I would complain. That is all.
*I know it is a stupid tax. A few dollars a month is worth it for the fun of dreaming.
**I know why they did it. They did it to make the jackpots higher because that increases ticket sales. Why people play when it is $400M but not $200M?
When they changed the odds, I just upped my threshold for buying tickets. I used to wait until the jackpot reached $200 million to buy, now I wait until it is $300 million.
I usually only play the lottery when I have “pot-odds”, meaning that the payout is greater than the odds times the price of a ticket.
Obviously, this is a bit foolish, as you only actually get about half the advertised amount if you take cash, then you lose about another half to taxes. You also may need to split the prize with someone else, further driving down expected value.
But, the odds change did change things from me playing the lottery when it was up over 200 million, to only playing when it is over 600 million. I believe that first one went up in odds and the other went up in price, then the first went up in price and the second went up in odds.
I mostly play the lottery because I have friends who say, “If I won the lottery, I’d…”, and then I ask them if they play the lottery, and they say “No.” Not saying that playing will cuase yo to win, but not playing does mean that you can’t have your fantastical dreams.
I’m with you. They are probably correct that tweaking the odds to make the pots bigger did result in more sales. I am not an economist, but it seems to me that as an alternative there is some point in the curve at which more winners at smaller amounts would have the same result of increasing sales. If everyone personally knew a cousin, friend, co-worker, barber, etc., who had won $500,000, then I imagine that would motivate more people to play regularly, because it would seem more accessible and not pure fantasy.
I don’t buy a ticket at all, because I figure the odds of me *finding *a ticket on the ground are immensely greater than the odds of it actually being a *winning *ticket. So why should I waste my own money on the more-likely half of the process?
(Yeah, I know this doesn’t make any sense, but neither does buying a ticket in the first place.)
That’s why I occasionally buy the smaller and far less publicized five digit lottery ticket with no power ball. The odds are far, far better, and the two to five million dollar payoff would be plenty enough for me.
I mean the way people discuss different strategies according to their relative expected rates of success.
When in fact “playing the lottery is and always was and always will be a losing proposition for you personally, that’s how it works, if it didn’t work that way the game wouldn’t exist” is the only helpful response.
My “expected rate of success” is to have a few daydreams about what I would do with the money. Those are at least as entertaining as anything else I could do with $2.
My Daddy always said to buy your tickets early in the week of the drawing. He never hit the lottery so it’s probably bunk.
He was incredibly lucky in all his gambling. He did match some numbers and got a chunk of change on occasion.YMMV.
Agreed. Certainly not something that should be purchased if you cannot afford an entertainment budget. I do fear that there are too many out there who but them with the actual expectation of winning.
When I buy them, I buy them early, as the entire point of having them is to daydream about being rich. If I buy the ticket the same day as the lottery, that is less time for entertainment than if I buy it earlier.
I wanna go get Powerball tickets now. I am so unlucky at anything that’s a game of chance. I have bought scratch offs and never won more than a free ticket. Ever.
So anything I buy is a waste of money.
But it is St. Patrick’s day, hmmm? I may have to go to the convenience store. ♧♧♧
I buy a ticket every once in a while because I have a budget. And in that budget, I have money allocated for entertainment. If SWMBO and I don’t go to the movies or something one month and the payoff is big enough, I’ll take the entertainment budget money and buy a ticket.
It’s entertaining. And if I happen to hit and win some loot, so much the better!
They make it complicated with all the power plays and all that.
I always do the random pick, rather than my own numbers, for two reasons.
One, I find it more convenient.
Two, if I have my own “lucky numbers”, then I would have to play them every lottery for the fear that the numbers come up on the week I don’t play. (Not really rational, I know, but it is the plot of at least a few 80’s sitcom episodes.)
I don’t play the big jackpot ones anymore-simply because I have no idea what I would do with all of that money. When I do decide to spring for a ticket (1-2 a month at the most), it’s typically for the 100,000 - 2 million jackpots.
Letting W denote your total wealth, the Kelly Criterion is to
Maximize Expectation Log W
rather than the usual
Maximize Expectation W
This Criterion is used by professional gamblers and investors. It will lead to results which agree with OP.
Let’s ask “How much ($x) should we be willing to pay for a ticket with 1/N chance of returning $N ?” UIAM this is solved with
x = exp((ln(w + n) + (n-1) * ln(w)) / n) - w
Setting W = $200,000 for example, and plugging into a calculator, I find
n = 10; x = $0.99998
n = 100; x = $0.99975
n = 1000; x = $0.9975
n = 10,000; x = $0.9758
n = 100,000; x = $0.8109
n = 1,000,000; x = $0.3584
n = 10,000,000; x = $0.0786
n = 100,000,000; x = $0.0124
Unless you really are an active gambler, the Kelly Criterion may be a poor fit to your actual utility function. Still, the fact that a Kelly Gambler wouldn’t pay 2¢ for a 1-in-hundred-million chance of winning $100,000,000 may be illuminating.
It generates more buzz. People are talking about it, it’s a news story (for people who still watch TV news).
I realize that I’m [del]probably[/del] throwing my money away, but if I am gonna throw my money away, I’m at least gonna throw it away on the fantasy of being like Scrooge McDuck & throwing up everything into the air in my Room Full of Money[sup]TM[/sup]. A million is nice, & will provide a cushion in life, but you can’t even comfortably retire on a million anymore, & if I’m retiring (young) tomorrow, I’m gonna wanna travel, w/o having to take off my shoes & carrying sample sized bottles of shampoo & toothpaste, which means my own airplane; see where this is going? IOW, if I’m gonna entertain the fantasy, I’m gonna entertain the blow-out over-the-top first class fantasy & not just the ‘nice’ fantasy for my wasted $2.
I’m with you OP: I’d be more likely to play the lotto if it had the same expected value but the prize was between $4 and $10 million. After taxes and de-annuitization I’d be looking at between $1 and $3 million, the upper range of which is more than enough to live comfortably for the rest of my life, and the lower range is still enough to immediately retire once you add it to my other savings.
