Comments on: Yahoo! Finance Disappoints: Powerball Jackpot Climbs To $75 Million?

By: XBR

XBR — Thu, 16 Jul 2009 00:40:46 +0000

What will you say to the people who spend $5-10 each week on watching movie, or even more on cable and other entertainment. In your opinion, they should stop entertaining themselves and put the money into HSBC. That sucks, the biggest mistake anyone can make is putting money into stock market.

By: rodgerlvu

rodgerlvu — Fri, 15 May 2009 06:38:08 +0000

I see it as a tax on people who are bad at math. :-)
heh

By: Bill K.

Bill K. — Wed, 27 Dec 2006 04:11:36 +0000

It’s a dollar and a dream. Some people place it on a lotto ticket, others go to Starbucks (and spend $7) as a splurge. That said, I agree that Yahoo shouldn’t be promoting it on a financial website.

By: David Syzdek

David Syzdek — Tue, 26 Dec 2006 00:22:13 +0000

I see it as a tax on people who are bad at math. :-)

By: matt

matt — Mon, 25 Dec 2006 21:47:57 +0000

My grandparents gamble/play the lottery very often. They’ve already got investments, but I imagine if they kept investing their money they could have moved to someplace nice, travelled some place other than the nearest casinos, etc. or (this is a bit selfish) occasionally given a lot of money to their children/grandchildren.

They also lease new cars every 2-3 years; they have two (an Altima and a Camry) even though only one of them drives. Perhaps they actually own one of them so they can put miles on it driving to casinos or something…

By: Jim Lippard

Jim Lippard — Mon, 25 Dec 2006 21:31:34 +0000

If you absolutely feel that you must occasionally play Powerball, here’s a better strategy: limit yourself to playing only when the expected utility on a Powerball ticket is greater than $1, and purchase only one ticket for each drawing when that’s the case. On all other weeks, put that money into savings instead of purchasing a Powerball ticket.

You calculate the expected utility of a Powerball ticket by taking the products of the probabilities of each payout combination and the amounts that would be paid out with that, and summing all of those up.

The expected utility of a Powerball ticket when the jackpot is $100 million is $0.34. At $200 million, it’s $0.68. Only at about $300 million does it exceed $1 (it actually occurs at a jackpot of slightly below that). At this level, if you actually purchased every combination of ticket, guaranteeing a win, and nobody else won, you would come out slightly ahead. At any jackpot level below this, if you purchased every combination of ticket, you’d lose money even if you were the only winner.

(This helps to illustrate just how bad a gamble Powerball is. Another good vivid demonstration is this Michigan SuperLotto simulator–pick your numbers, and tell it how many draws you want to do, and it will show you how often you’d expect to get 0, 1, 2, 3, 4, 5, and 6 matching numbers. You get 4 matching numbers about once every 1,000 draws…)

Lotteries are great ways to make money–if you’re the one running the lottery (one of the first money-making activities that P.T. Barnum engaged in).