The Money Mustache Community
Around the Internet => Antimustachian Wall of Shame and Comedy => Topic started by: jmusic on February 20, 2015, 03:03:23 PM
-
http://wizardofodds.com/games/lottery/
Most of us around here are aware that lotteries are generally a BAD IDEATM, but I was curious about the actual probabilities of it. For just about any given lottery ticket, the expected return of $1 investment is $.50, representing a house edge of around 50% give or take. Even playing "The Big One," if you bought every single lottery ticket and thus guaranteed a "winner," you'd get $0.477 back for each dollar invested.
As a point of comparison, if you were to play blackjack at a casino using proper statistically tested strategy, the house edge is (only) around 0.50%!!! Every dollar invested would return $.995, of course if you don't follow the proper strategy your expected return could be substantially less. Even slot machines (one of the worst options at the casino) have a house edge of only 13% or so!
Of course, there are people who can consistently make money at casinos; they are taking money from other (usually Poker) players, not the house.
-
At least here they call it the education lottery.
I call it a tax on people who can't do math, and the money goes to pay for education so maybe the next generation can do math. In theory it would run its course until no one bothered to play it because they could all do math.
Just one problem... public education.
-
LOL...it is a tax on people who can't do math but thanks for the statistics. Oddly enough here in Las Vegas Nevada gambling capital there is no state lottery...but go to the casinos. ;-)
-
If the jackpot gets high enough, the expected value of a $1 ticket can creep up above $1... which is when all the people who don't normally play pile on. Of course, what they don't realize is that even if the expected value is positive, the risk-adjusted return is absurdly low (unless you have $176 million to invest and an army of people to fill out tickets (http://www.forbes.com/sites/joshbarro/2012/03/30/can-you-ever-guarantee-a-mega-millions-win/)).
Apparently, people are starting to get marginally more savvy about it, because the Georgia lottery is running an ad campaign that "any jackpot is a good jackpot," featuring a husband apologizing to his wife because he played when he felt lucky and "only" won $15 million.
-
As an aside, the wizardofodds.com is a fantastic site. It's written by a professional actuary and casino game creator. It's pretty interesting going through the various games and learning the math behind the odds of winning and losing.
Mike
-
http://wizardofodds.com/games/lottery/
Most of us around here are aware that lotteries are generally a BAD IDEATM, but I was curious about the actual probabilities of it. For just about any given lottery ticket, the expected return of $1 investment is $.50, representing a house edge of around 50% give or take. Even playing "The Big One," if you bought every single lottery ticket and thus guaranteed a "winner," you'd get $0.477 back for each dollar invested.
As a point of comparison, if you were to play blackjack at a casino using proper statistically tested strategy, the house edge is (only) around 0.50%!!! Every dollar invested would return $.995, of course if you don't follow the proper strategy your expected return could be substantially less. Even slot machines (one of the worst options at the casino) have a house edge of only 13% or so!
Of course, there are people who can consistently make money at casinos; they are taking money from other (usually Poker) players, not the house.
Interesting site. My grandfather was a bookie he set the odds on horse races back in the day--it's what brought the family to Las Vegas, back when I was 14 and pissed off to spend my summers in this hellhole. I noticed how rarely he gambled and think this is a great town to make money if you don't suffer from the addictions that are so common here...take the house out and poker is zero sum...there's ways to be a successful gambler but the lottery sure ain't one of them!
-
My uncle won the lotto. Almost 20 mil. Just sayin'.
-
My uncle won the lotto. Almost 20 mil. Just sayin'.
Awesome! Did he get a structured settlement or lump sum? What were his taxes?
I can't win since I don't buy tickets...
-
How funny as I just purchased a ticket in a charity lotto. In my defence the proceeds go to a good cause and I don't expect to win.
-
So what if someone wants to spend a couple bucks a month on lottery tickets? I don't see the big deal. Dave Ramsey gets all worked up over lottery tickets too, and I just don't understand who he's talking to when he starts up on it. Is he imagining someone who invests in lottery tickets, or buys large numbers of them with the expectation of actually winning? Because I didn't know such a person existed. Instead he ends up aggravating me by lecturing me about how I spend occasional pocket change. If I bought two soda pops a month instead of lottery tickets, would that be better somehow?
-
So what if someone wants to spend a couple bucks a month on lottery tickets? I don't see the big deal. Dave Ramsey gets all worked up over lottery tickets too, and I just don't understand who he's talking to when he starts up on it. Is he imagining someone who invests in lottery tickets, or buys large numbers of them with the expectation of actually winning? Because I didn't know such a person existed. Instead he ends up aggravating me by lecturing me about how I spend occasional pocket change. If I bought two soda pops a month instead of lottery tickets, would that be better somehow?
A lot of truth there. Somebody who spends 5 bucks a month on tickets as opposed to $5 a day on lattes, well, at least the lotto player has the hope of getting something out of it...odds aren't good but it does still happen.
I think ranting is more directed at folks who use lottery as a substitute for real wealth planning, which is why both are common amongst working classes--the I don't have enough money to save or invest, but someday my ship will come in mentality...
-
As an aside, the wizardofodds.com is a fantastic site. It's written by a professional actuary and casino game creator. It's pretty interesting going through the various games and learning the math behind the odds of winning and losing.
Mike
Couldn't agree more. I love that site.
-
While I don't buy lottery tickets for the already mentioned reasons (math, etc.) I do work with a number of scientists and engineers who do despite being able to understand the odds and calculate the expected value of a ticket. I brought this up during coffee not long ago, and one scientist explained it to me this way: The amount being spent on one ticket is trivial compared to their income and other spending, but for that couple bucks it buys them a period where they can dream about the winnings and what they would do with it. They don't actually expect to win, but since there is a small chance, that ticket buys them a bit of hope/entertainment. I guess it's really not that much different than spending a few bucks on a movie.
-
When Powerball or Megamillions gets in the over $200M range I'll buy a lotto ticket. Dreaming what I would do if I won is worth the $1 or $2 at that point.
-
So what if someone wants to spend a couple bucks a month on lottery tickets? I don't see the big deal. Dave Ramsey gets all worked up over lottery tickets too, and I just don't understand who he's talking to when he starts up on it. Is he imagining someone who invests in lottery tickets, or buys large numbers of them with the expectation of actually winning? Because I didn't know such a person existed. Instead he ends up aggravating me by lecturing me about how I spend occasional pocket change. If I bought two soda pops a month instead of lottery tickets, would that be better somehow?
A lot of truth there. Somebody who spends 5 bucks a month on tickets as opposed to $5 a day on lattes, well, at least the lotto player has the hope of getting something out of it...odds aren't good but it does still happen.
I think ranting is more directed at folks who use lottery as a substitute for real wealth planning, which is why both are common amongst working classes--the I don't have enough money to save or invest, but someday my ship will come in mentality...
There are definitely people who spend a significant amount of money that they can't afford on lottery tickets. These are the people that inspire so much ire from the financial guru types.
I was stuck in a gas station line for like 20 minutes once behind a pair of young women who collectively spent over $200 on a variety of scratch offs and other tickets, and of course they had to pick numbers for each one and kept changing their minds about what they wanted. Based on the cashier's comments after they left, this was a fairly regular occurrence. It also happened to be a Friday, so I'm guessing they did this every paycheck.
I think that's a lot different than my aunt, for example, who has a great state pension and a 401k on top of that, doesn't mind her job, and spends maybe $10 a month, every month on the lottery. She still makes the jokes about how she can't retire unless she wins it, but that's not really true. She's also been working since she was 12 years old (and is over 60 now) and legitimately can't fathom the idea of not doing something resembling work until she dies -- her goal is to do part time non profit stuff, but even if she volunteered she would view it/treat it as a job. I wish she wouldn't, but I can't shame her for it like I can the two girls I mentioned above.
-
“A man's gotta make at least one bet a day, else he could be walking around lucky and never know it.”
Jim Jones (1931–1978 ~ American community organizer)
-
I don't play the regular lotto like Powerball or any of other numbers games. Occasionally I buy myself a scratcher, there 2 I like to play. One is a crossword puzzle based game and the other is bingo based. It's fun and I've won nice prizes on occasion. Nothing huge, $100-$70-$500 a couple of times. Spending $6 on two $3 tickets a couple of times a month is probably foolish, but no worse then someone buying a book of crosswords or Sudoku.
I also pick up losing tickets I find and enter them in the second chance drawing the lottery in my state does and have won some cash prizes on those, winning on tickets I didn't buy.
-
A lot of truth there. Somebody who spends 5 bucks a month on tickets as opposed to $5 a day on lattes, well, at least the lotto player has the hope of getting something out of it...
Starbucks makes us all feel like winners. Buy 12 overpriced lattes and you get one free. 8.33% return on investment!
P.S. To clarify for the internet police, yes that's sarcasm.
-
Over here in the uk the odds of winning our national lottery are 1 in 14m. A while back one of my favourite stats based programs did the sums and came up with the conclusion that for a non smoking male in his 30s you should never buy a ticket for the Saturday draw before Wednesday afternoon, as any earlier and your chances of dieing before the draw are higher than your chance of winning. It's a sobering way of thinking about the odds that really helps to put the numbers into perspective, as otherwise they can be too vast for most people to get their head round.
Of course you need to adjust based on your own life expectancy and local lottery odds...
-
Last Week Tonight did a segment on lotteries that is worth watching
https://www.youtube.com/watch?v=9PK-netuhHA
-
When Powerball or Megamillions gets in the over $200M range I'll buy a lotto ticket. Dreaming what I would do if I won is worth the $1 or $2 at that point.
I'm surprised to see this perspective on the MMM forums, since even the smallest Powerball jackpot ($40MM IIRC) is life changing FIRE money.
My "don't buy lottery tickets" mentality has been cemented in by the Wait But Why (http://waitbutwhy.com/2014/11/from-1-to-1000000.html) post on numbers a few months back. Take a look at the image of 1 million dots on your screen. Spend a couple minutes trying to find the red one. Then imagine the image being ~176 times larger, but only still having one red dot. Don't play the lottery.
-
for a non smoking male in his 30s you should never buy a ticket for the Saturday draw before Wednesday afternoon, as any earlier and your chances of dieing before the draw are higher than your chance of winning.
Now that's a great way of thinking about it!
-
My mom will buy the scratch off tickets that are games. She wins a little bit, enough to break even at least. It's the entertainment value for her.
-
At least here they call it the education lottery.
I call it a tax on people who can't do math, and the money goes to pay for education so maybe the next generation can do math. In theory it would run its course until no one bothered to play it because they could all do math.
Just one problem... public education.
This doesn't work like you'd hope. See this entertaining John Oliver bit about this depressing problem: https://www.youtube.com/watch?v=9PK-netuhHA
-
Last Week Tonight did a segment on lotteries that is worth watching
https://www.youtube.com/watch?v=9PK-netuhHA
Oops should've read further!
-
My mom will buy the scratch off tickets that are games. She wins a little bit, enough to break even at least. It's the entertainment value for her.
If she plays regularly, your mom is not breaking even. That's just not how the math works. The lottery couldn't stay in business that way.
-
When Powerball or Megamillions gets in the over $200M range I'll buy a lotto ticket. Dreaming what I would do if I won is worth the $1 or $2 at that point.
I've said it before and I'll say it again: I occasionally buy a lotto ticket where the jackpot is like $10 million. I figure I have the highest chance of winning a low jackpot, and $10 million is effectively infinity money as far as my life happiness goes (any amount that will let me retire with a "minimum" in annual comfort expenses will make me as happy as twice that amount... in theory).
It's fun, and well worth the $0.50 for the entertainment value.
YMMV
-
I won the loto!!!!
I put in $0 and got $0 out, so that's like an infinite % profit right?
-
So what if someone wants to spend a couple bucks a month on lottery tickets? I don't see the big deal. Dave Ramsey gets all worked up over lottery tickets too, and I just don't understand who he's talking to when he starts up on it. Is he imagining someone who invests in lottery tickets, or buys large numbers of them with the expectation of actually winning? Because I didn't know such a person existed. Instead he ends up aggravating me by lecturing me about how I spend occasional pocket change. If I bought two soda pops a month instead of lottery tickets, would that be better somehow?
A friend of mine used to work at a convenience store in a disadvantaged part of town. Around the 1st of the month a number of people, always the same ones, would come to the store to buy beer and hundreds of dollars of lotto tickets and scratchers. He would see them less and less over the course of the month, and not at all for the last week or so, until the 1st of the following month.
He was sure they were on welfare or some other arrangement where they received a fixed income at the start of each month. Which means, they were getting such a meagre amount to begin with, and were spending a significant amount of it on lottery tickets and other gambling.
Those types of people are the ones that Dave Ramsey targets in his rants, in my view. I will occasionally buy a $2 lottery ticket when I get the urge, probably 1-2 times a year.
-
I won the loto!!!!
I put in $0 and got $0 out, so that's like an infinite % profit right?
0/0 = indeterminate
-
I will occasionally buy a lotto ticket. I think it's a pretty good deal for $1-$2 worth of fun. I'd estimate that in my biggest lotto year the expenses came to under $30. Of all the battles to pick, the lotto is a dumb one. I've never gone into it thinking it was a wise way to spend $2 bucks...but then again, its $2 bucks, and like other have said, is it worse than buying a cup of coffee?
-
I don't play, but it doesn't seem ridiculous to me to put yourself in the running at times. After all, people do win pretty regularly (granted, US population is 319 million). At $1 it's less than a soda, and has positive rather than negative health effects (hope is good for mental health). I could see buying one out of every paycheck, or once a month, or on your birthday, that kind of thing.
It does seem silly to me to try to game the system by spending non-trivial amounts of money on it. Or, of course, plan on the winnings instead of planning the rest of your life.
-
$50B/yr at 250m:1 odds = ~200 winners a year. 4/week. Yeah, someone is probably winning a lottery somewhere every week, so it's in the news a lot. It's only because so many people put so much in play.
I trust MMMers that have control on their stupid expenses to be able to handle $10/year on an indulgence. Where I grew up, it was common for people to be spending $10/week on it despite working part time 30 hour minimum wage jobs.
-
I don't buy lottery tickets, and it pains me to see very low income people throwing money away on lottery tickets that they can ill-afford, but what can I say to this young single mother of 4? including one child with CP? You really shouldn't be buying lottery tickets?
http://www.cnn.com/2015/02/23/us/north-carolina-powerball-jackpot-winner/
-
Funny, I was thinking about this just yesterday.
A woman in our area had a BIG lottery win yesterday, and they showed her on the news. She's a single mom -- unemployed -- with four children between 9 months and 7 years old, one of whom has a serious medical condition. She is also caring for her mother. She looked good on TV: well-spoken, was concerned about her children not becoming spoiled now that she has money, saying she's giving a portion of her winnings to a couple charities.
I can really see why people see this type of story and say, "Wow, that could be me!"
But she also admits that until yesterday she was VERY poor, yet she spent $15 on lottery tickets. She's exactly the person who shouldn't have been wasting $15 on tickets, yet it worked for her -- and to a lot of people that's a strong argument.
-
A friend of mine used to work at a convenience store in a disadvantaged part of town. Around the 1st of the month a number of people, always the same ones, would come to the store to buy beer and hundreds of dollars of lotto tickets and scratchers. He would see them less and less over the course of the month, and not at all for the last week or so, until the 1st of the following month.
He was sure they were on welfare or some other arrangement where they received a fixed income at the start of each month. Which means, they were getting such a meagre amount to begin with, and were spending a significant amount of it on lottery tickets and other gambling.
Those types of people are the ones that Dave Ramsey targets in his rants, in my view. I will occasionally buy a $2 lottery ticket when I get the urge, probably 1-2 times a year.
When I was in grad school, I paid for my living expenses by working at a convenience store. It was one of the most depressing experiences of my life. The worst was when I saw single parents with really malnourished children come into the store to buy cigarettes and scratch tickets. Addiction is a terrible thing.
-
I don't buy lottery tickets, and it pains me to see very low income people throwing money away on lottery tickets that they can ill-afford, but what can I say to this young single mother of 4? including one child with CP? You really shouldn't be buying lottery tickets?
http://www.cnn.com/2015/02/23/us/north-carolina-powerball-jackpot-winner/
I'd tell her what I believe to be the truth: "Consider yourself extremely lucky, and you should be grateful for your fellow Americans willing to buy the 282 million losing tickets that made your jackpot possible."
I used to think that people should always take the lump sum payment, but after reading story after story about post-jackpot misfortunes, I can't help but think that opting for payments-over-time might actually produce better happiness outcomes.
-
I've never played the lottery in my life until a couple weeks ago.
When the Powerball jackpot got up around $500M, my coworkers started a pool. Everyone was putting in $10. A coworker asked if I wanted to play. She was thinking we'd have about 10 people, so it would be $50M each (less of course with lump sum and taxes taken out). I laughed about the idea that I would even know what to do with that much money, and jokingly told her I wanted to buy in for a tenth of a share ($1) instead. She said that I couldn't put in $1 because a ticket costs $2. I figured the value of the ridiculous conversations coming from all this would be worth my dollar, so I found another coworker to pay for the other half of my ticket.
We ended up with $122 (66 tickets) of which I had a 1/122 share. Another coworker put together a spreadsheet of projected winnings, including his estimate of taxes. My share was projected at $1.6M lump sum after taxes. Everyone was talking about how empty the office would be once they won and all retired, and laughing that I'd still be stuck here. Informing them that $1.6M was way more than I would need to retire with them led to hilarious expressions of disbelief.
In the end, we won $8. My share was six and a half cents. I donated it to the candy bowl fund.
-
I've never played the lottery in my life until a couple weeks ago.
When the Powerball jackpot got up around $500M, my coworkers started a pool. Everyone was putting in $10. A coworker asked if I wanted to play. She was thinking we'd have about 10 people, so it would be $50M each (less of course with lump sum and taxes taken out). I laughed about the idea that I would even know what to do with that much money, and jokingly told her I wanted to buy in for a tenth of a share ($1) instead. She said that I couldn't put in $1 because a ticket costs $2. I figured the value of the ridiculous conversations coming from all this would be worth my dollar, so I found another coworker to pay for the other half of my ticket.
We ended up with $122 (66 tickets) of which I had a 1/122 share. Another coworker put together a spreadsheet of projected winnings, including his estimate of taxes. My share was projected at $1.6M lump sum after taxes. Everyone was talking about how empty the office would be once they won and all retired, and laughing that I'd still be stuck here. Informing them that $1.6M was way more than I would need to retire with them led to hilarious expressions of disbelief.
In the end, we won $8. My share was six and a half cents. I donated it to the candy bowl fund.
That's hilarious that they dedicated the time to do a "projected winnings spreadsheet"
That's about as productive as my "projected gains spreadsheet" I do with my investments and.. uh... nevermind
-
In the end, we won $8. My share was six and a half cents. I donated it to the candy bowl fund.
I always like when people (not you, I feel like you are pretty realistic about this) talk about how they "won" a small amount. And that small amount was less than they put in to begin with.
No one seems to realize that isn't winning.
-
When the lotto was at a really high amount (when the aforementioned single mom won) recently, our office's highly eccentric receptionist/secretary came around collecting money for a lotto ticket pool. I initially passed, as I share the same mindset that many of the others in this thread have expressed: lotteries are a tax on people who don't understand statistics. However, in thinking about it more, I decided "What the heck, $2 for the amusement of seeing everyone's reactions via the emails would be worth it'.
One of my friends who sits nearby had also initially passed up on joining the pool but later in the day told us that he had changed his mind- not for the entertainment value like I had, but because of a conversation that he had with another of our co-workers who pointed out that a near majority of the office was in on the pool, and he was only putting in enough for a share so on the miniscule chance that they won the jackpot that he wouldn't be one of the people 'left behind' after everyone who had won had quit and left. As my friend put it, "If the rest of these assholes won, I'd probably have to kill myself from their smugness if I hadn't won as well..."
Out of quite a lot of money collected, the office pool won like $100- which was then put back into getting more tickets for the heck of it.
-
My uncle won the lotto. Almost 20 mil. Just sayin'.
Awesome! Did he get a structured settlement or lump sum? What were his taxes?
I can't win since I don't buy tickets...
Late reply-not important but a reminder that in Canada you get a big fat cheque tax free!!!
-
A friend of mine used to work at a convenience store in a disadvantaged part of town. Around the 1st of the month a number of people, always the same ones, would come to the store to buy beer and hundreds of dollars of lotto tickets and scratchers. He would see them less and less over the course of the month, and not at all for the last week or so, until the 1st of the following month.
He was sure they were on welfare or some other arrangement where they received a fixed income at the start of each month. Which means, they were getting such a meagre amount to begin with, and were spending a significant amount of it on lottery tickets and other gambling.
Those types of people are the ones that Dave Ramsey targets in his rants, in my view. I will occasionally buy a $2 lottery ticket when I get the urge, probably 1-2 times a year.
Is there a hope in hell that any of these folks are even aware of Dave Ramsey, or of the fact they are being ranted at? They seem kind of sadly oblivious to me, which would make the rants... wasted?
-
I think part of the problem with playing the lottery is that whether consciously or unconsciously it can change some peoples mindset from "I'm going to get up, work my ass off and make good money, save for the future and then retire all while enjoying the ride" to the "just gotta get through till my numbers come up! Then i'll be set!" mentality.
-
At least here they call it the education lottery.
I call it a tax on people who can't do math, and the money goes to pay for education so maybe the next generation can do math. In theory it would run its course until no one bothered to play it because they could all do math.
Just one problem... public education.
The money that goes to education if offset by cuts to education so the total amount of money they receive stays even and the lottery money effectively goes elsewhere. It's a tax that primarily impacts the poor and an ethical government would ban it.
-
Totally off topic, but this
Jim Jones (1931–1978 ~ American community organizer)
is an amazing stretch of language. Technically true, I suppose.
-
I buy a ticket every once in a while, and by once in a while, the last time I bought one was maybe a year ago. The $1 is a small price to pay for a moment's dream of winning. That said, I might dread winning as boatloads of people will suddenly discover that they are a good friend of mine and come over looking for a handout.
Anyone know if you can buy a ticket and claim any prize anonymously?
-
At least here they call it the education lottery.
I call it a tax on people who can't do math, and the money goes to pay for education so maybe the next generation can do math. In theory it would run its course until no one bothered to play it because they could all do math.
Just one problem... public education.
The money that goes to education if offset by cuts to education so the total amount of money they receive stays even and the lottery money effectively goes elsewhere. It's a tax that primarily impacts the poor and an ethical government would ban it.
This is the best assessment by far, but I still wonder if "banning" it would help. People who want to gamble will find a way to gamble. Instead of proceeds going to the state coffers, it will end up with Joe the bookie. Basically the converse of "legalize and tax pot"
-
Until someone comes up with a way that you can have digital tickets that track the purchaser which have a payout chance of 0% until you've bought 100 $1 tickets and then you get a 100% chance of winning $100 I think it's better that they be banned. Prohibition isn't always successful but the lottery makes gambling socially acceptable, even encouraged, as part of a regular routine. You can't save the degenerates and the mustachians don't need help but the people in-between are worth fighting for.
-
There were, and occasionally still are, some state-run games in which you can get a statistical return of more than the money you put in. Generally, this either relies on a flaw in a random generator for the game (where things are not actually random), or a game in which a large sum of money gives you good chances of coming out ahead (for example, where if you buy enough different tickets, you are statistically more likely than not to win the jackpot + various 2nd and 3rd tier prizes.)
But unless you have a strong math background and a lot of cash and enough luck to find such a game, you're wasting your dollars.
But at least those dollars partly go into educating kids into what statistics are and how they can help you not buy lottery tickets.
-
There were, and occasionally still are, some state-run games in which you can get a statistical return of more than the money you put in. Generally, this either relies on a flaw in a random generator for the game (where things are not actually random), or a game in which a large sum of money gives you good chances of coming out ahead (for example, where if you buy enough different tickets, you are statistically more likely than not to win the jackpot + various 2nd and 3rd tier prizes.)
But unless you have a strong math background and a lot of cash and enough luck to find such a game, you're wasting your dollars.
But at least those dollars partly go into educating kids into what statistics are and how they can help you not buy lottery tickets.
Sure, expected value is sometimes greater than cost of ticket when jackpot gets really high but typically that assumes one winner. When the pot gets that high you usually have multiple winners. And, expected value is just the mean value, you can still have all losing tickets. Your winnings approach the mean value per ticket, as you said, "if you buy enough different tickets." Lots of them.
The lottery dollars don't help pay for education because the politicians put the lottery money into education funds, as promised, but then pull out an equal amount to fund their other pet projects. More "new math", "smoke and mirrors", etc.
-
There were, and occasionally still are, some state-run games in which you can get a statistical return of more than the money you put in. Generally, this either relies on a flaw in a random generator for the game (where things are not actually random), or a game in which a large sum of money gives you good chances of coming out ahead (for example, where if you buy enough different tickets, you are statistically more likely than not to win the jackpot + various 2nd and 3rd tier prizes.)
But unless you have a strong math background and a lot of cash and enough luck to find such a game, you're wasting your dollars.
But at least those dollars partly go into educating kids into what statistics are and how they can help you not buy lottery tickets.
Sure, expected value is sometimes greater than cost of ticket when jackpot gets really high but typically that assumes one winner. When the pot gets that high you usually have multiple winners. And, expected value is just the mean value, you can still have all losing tickets. Your winnings approach the mean value per ticket, as you said, "if you buy enough different tickets." Lots of them.
The lottery dollars don't help pay for education because the politicians put the lottery money into education funds, as promised, but then pull out an equal amount to fund their other pet projects. More "new math", "smoke and mirrors", etc.
OP here... I'm surprised this thread is still alive!
Regarding the cases where the expected return > cost, this did happen a few years ago with MIT students...
http://newsfeed.time.com/2012/08/07/how-mit-students-scammed-the-massachusetts-lottery-for-8-million/
I'm sure most lottery operators these days are aware of the proliferation of math whizzes and ever more powerful computers, so they're very careful to avoid these scenarios. Not saying that opportunities will never happen again, just that it's probably not worth the time invested to look for them...
-
I saw this thread title yesterday and it reminded me that I had some lottery tickets at home from 2 Christmas' ago that my kids had been gifted. I cashed them in last night at the gas station.
I have $12. Well, it's really their $12 but they long forgot about them. haha
-
When powerball or megamillions gets ridiculously high then i spend a dollar or 2 on a lotto ticket. I view it as a cost to daydream. It is once in awhile so if I must turn in my mustachian card as a result then so be it.
-
There were, and occasionally still are, some state-run games in which you can get a statistical return of more than the money you put in. Generally, this either relies on a flaw in a random generator for the game (where things are not actually random), or a game in which a large sum of money gives you good chances of coming out ahead (for example, where if you buy enough different tickets, you are statistically more likely than not to win the jackpot + various 2nd and 3rd tier prizes.)
But unless you have a strong math background and a lot of cash and enough luck to find such a game, you're wasting your dollars.
But at least those dollars partly go into educating kids into what statistics are and how they can help you not buy lottery tickets.
Sure, expected value is sometimes greater than cost of ticket when jackpot gets really high but typically that assumes one winner. When the pot gets that high you usually have multiple winners. And, expected value is just the mean value, you can still have all losing tickets. Your winnings approach the mean value per ticket, as you said, "if you buy enough different tickets." Lots of them.
The lottery dollars don't help pay for education because the politicians put the lottery money into education funds, as promised, but then pull out an equal amount to fund their other pet projects. More "new math", "smoke and mirrors", etc.
OP here... I'm surprised this thread is still alive!
Regarding the cases where the expected return > cost, this did happen a few years ago with MIT students...
http://newsfeed.time.com/2012/08/07/how-mit-students-scammed-the-massachusetts-lottery-for-8-million/
I'm sure most lottery operators these days are aware of the proliferation of math whizzes and ever more powerful computers, so they're very careful to avoid these scenarios. Not saying that opportunities will never happen again, just that it's probably not worth the time invested to look for them...
For an fun read on this (and other interesting situations involving math) I highly recommend Jordan Ellenburg's How Not to Be Wrong: The Power of Mathematical Thinking
-
So what if someone wants to spend a couple bucks a month on lottery tickets? I don't see the big deal. Dave Ramsey gets all worked up over lottery tickets too, and I just don't understand who he's talking to when he starts up on it. Is he imagining someone who invests in lottery tickets, or buys large numbers of them with the expectation of actually winning? Because I didn't know such a person existed. Instead he ends up aggravating me by lecturing me about how I spend occasional pocket change. If I bought two soda pops a month instead of lottery tickets, would that be better somehow?
As a student, I sold lottery tickets in two different cities. You get 'regulars' spending $50-1500/week. And you know they can't afford it. I don't think I could stomach it again.
That said, I spend $10-15 a year, buying a $2-5 ticket every few months. I do not check it for a few months, and enjoy spending the money in my head. A common theme walking away from a want in a store is to say to myself "won't it be funny when I realise I won the lottery a month before I didn't buy another pink shirt? I wonder if it'll be on clearance when I finally claim my cash". I also like to imagine the least amount of money I can win to FIRE myself, ship a few friends and relatives closer to me for a catch up vacation, etc. It is a luxury, like a fine novel/the 10$ in late fees to the library I budget each year. Both stimulate my imagination.
A lot of truth there. Somebody who spends 5 bucks a month on tickets as opposed to $5 a day on lattes, well, at least the lotto player has the hope of getting something out of it...odds aren't good but it does still happen.
I think ranting is more directed at folks who use lottery as a substitute for real wealth planning, which is why both are common amongst working classes--the I don't have enough money to save or invest, but someday my ship will come in mentality...
There are definitely people who spend a significant amount of money that they can't afford on lottery tickets. These are the people that inspire so much ire from the financial guru types.
I was stuck in a gas station line for like 20 minutes once behind a pair of young women who collectively spent over $200 on a variety of scratch offs and other tickets, and of course they had to pick numbers for each one and kept changing their minds about what they wanted. Based on the cashier's comments after they left, this was a fairly regular occurrence. It also happened to be a Friday, so I'm guessing they did this every paycheck.
I think that's a lot different than my aunt, for example, who has a great state pension and a 401k on top of that, doesn't mind her job, and spends maybe $10 a month, every month on the lottery. She still makes the jokes about how she can't retire unless she wins it, but that's not really true. She's also been working since she was 12 years old (and is over 60 now) and legitimately can't fathom the idea of not doing something resembling work until she dies -- her goal is to do part time non profit stuff, but even if she volunteered she would view it/treat it as a job. I wish she wouldn't, but I can't shame her for it like I can the two girls I mentioned above.
-
My old office used to do a lottery pool. I always contributed for two reasons:
1. To be a part of the gang
2. Because I didn't want to be the one chump left at his desk when they all won - being smugly right about the odds wouldn't have been worth that feeling.
Overall I probably spent about $100 over 5 years (it was an on and off thing). Worth it, though we never won.
My high school teachers all won in a collective lottery pool a few years after I graduated. They then immediately began suing each other and otherwise being utterly shitty people for the next few years.
-
My Dad could easily afford it, but he had a $20/week lottery habit. As a young teen, he'd hand me a $20 and ask me to go play lotto for him. The storekeeper knew us, so he'd process it for me, no problem. Then again, I also used to buy cigs for Daddy when he smoked, and I was like 8, but that's a different story...
Anyhow, as I got older and realized what a bad idea the lotto was, I would take the money and not actually play, but I did keep the results to prove that Dad wasn't gonna win anyhow. After a while, I gave him back his "winnings" by not playing, along with the results of the non-played games. He didn't seem to know what to do about it, so he gave me some of the money and rarely played lotto after that! I saved that cash too, I used to get a thrill out of pulling out all my bills and coins and just counting them.
Guess I had some mustachian tendencies even as a little girl. ;)
-
If he won though....
-
If he won though....
LOL, my parents were the worst with that stuff. If they saw a picture in the newspaper with a license plate number visible, they would play that, b/c a "friend of a friend" would do that and won all the time. For all the years he did play, he barely hit three numbers, and most of the time, he would never check his tickets. Eventually I'd pull a pile out of his wallet and check for him, but I'm sure he lost a few along the way.
My mom always said my dad was a huge spender until she came around. Knowing what I know now, she was good with money, but she ain't got nothing on me and my mustachian ways! She would think I am crazy...
-
Regarding the cases where the expected return > cost, this did happen a few years ago with MIT students...
http://newsfeed.time.com/2012/08/07/how-mit-students-scammed-the-massachusetts-lottery-for-8-million/
I'm sure most lottery operators these days are aware of the proliferation of math whizzes and ever more powerful computers, so they're very careful to avoid these scenarios. Not saying that opportunities will never happen again, just that it's probably not worth the time invested to look for them...
Yep. I'm not talking about powerball, I'm talking about those weird edge cases where someone fucks up and someone else figures out how to take advantage of it. It's pretty cool to read about. But I would never put my own money into such a scheme.
-
A Kiwi friend tells me the New Zealand lottery is pretty decent because there's only 4 million on the island. A 1 in 4 million chance isn't going to get him to blow his life savings on it.* But it's far better odds than US lotteries and makes the occasional purchase palatable.
* 1 in 4 mil because NZ does have plenty of silly people to make up for invalids, children, Mustachians, etc who can't/won't buy them.
-
I, personally, don't think it's a big deal to spend a few bucks on the lottery each month. Although, there are definitely people who spend tons of money on scratch tickets each month and that is over the top.
I am in a Mega Millions pool at my work. I pay $10 every 5 weeks. It's worth it, in my opinion. Paying that money isn't breaking my budget, and it's fun to daydream with my co-workers about how empty the office would be once we all hit the jackpot and quit our jobs lol. Although, I do admit that at this point in the office pool, I have been doing it so long that I cannot quit now. We have been doing it for about 3 years and if there was ever a time where I said I didn't want to be in for one round and then they ended up winning that jackpot when I wasn't in on it, then I'm pretty sure I'd have to kill myself. So, that fear of possibly missing out on the Big Win does make me keep contributing my $10 every 5 weeks lol. I usually only buy my own separate Mega Millions or Powerball ticket when the jackpot gets really large.
-
I don't think anyone thinks it's a real problem for people to buy a ticket or two a month if you have the money to spend; that's a harmless indulgence. But I think most people don't realize that most lottery tickets are being bought by people who are spending tons of money from their very limited resources. Think about it: Americans spend $68 billion on the lottery each year, and there are only 320 million Americans. That's $200 a year on lottery tickets for every man, woman, and child in the country. Now think of all the people you know, like me, who spend $0 on lottery tickets a year, or the people who are buying a ticket every once in a blue moon, who are spending maybe $20 or $40 a year. So someone else is buying their share. And, believe me, the people who are buying all those extra lottery tickets are not the FI people with money to burn, because if you're already FI, why would you bother playing the lottery? It's poor people who are bringing in maybe $400 a week, and then going and spending $30 or $40 of that on lottery tickets on payday, because they don't see any other way out of their financial problems and don't realize just how bad the odds are. And that makes up a LOT more of lottery ticket purchases than most oh-i'll-buy-a-ticket-on-my-birthday casual office worker players realize. It is a tax on the poor, and I think it's awful. Not 100% sure it should be banned, for the reasons mentioned above, but at the least states shouldn't be spending millions of dollars advertising it trying to convince people to part with their hard-earned money, because, hey, it could be you!
-
When powerball or megamillions gets ridiculously high then i spend a dollar or 2 on a lotto ticket. I view it as a cost to daydream. It is once in awhile so if I must turn in my mustachian card as a result then so be it.
This. $2 a couple times a year has absolutely no impact on my life or future.