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Re: $315M Powerball Winner is now broke
Old 01-23-2007, 09:36 PM   #41
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Re: $315M Powerball Winner is now broke

Quote:
Originally Posted by kaudrey
I play when the amount is over $75M. I read somewhere that it is "worth it" if the jackpot is over $80M or something - can't find the link right now...

I just do it for fun. If I spend $20 on it a year, it's not going to impact my FIRE plans!

Karen
I've never understood that argument. Your odds of winning are no better when it's 75M than if it's 1M. And the ROI is so amazing even at 1M, that there's no point waiting for a super jackpot. Either it's a math tax or it's not

And I shouldn't feel so bad - the lottery paid about 3k of my college education. It'll take me many years of losing before I even am in the red.
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Re: $315M Powerball Winner is now broke
Old 01-23-2007, 11:42 PM   #42
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Re: $315M Powerball Winner is now broke

I think it's a "Jackpot x chance of winning (in decimal form) > $1 argument. That is, if you have one in 80 million chance of winning, and the jackpot is 81 million, a ticket is worth slightly more than $1. Putting tax/lump sum/leeching relatives aside, of course.
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Re: $315M Powerball Winner is now broke
Old 01-24-2007, 07:09 AM   #43
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Re: $315M Powerball Winner is now broke

I used to play the lottery when I worked. I alway joined in the office pools because I knew it they ever won and I was not in, I would be so bitter for the rest of my life! It was more like insurance than a lottery ticket.
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Re: $315M Powerball Winner is now broke
Old 01-24-2007, 07:11 AM   #44
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Re: $315M Powerball Winner is now broke

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Originally Posted by NinjaPigeon
I've never understood that argument. Your odds of winning are no better when it's 75M than if it's 1M. And the ROI is so amazing even at 1M, that there's no point waiting for a super jackpot. Either it's a math tax or it's not

And I shouldn't feel so bad - the lottery paid about 3k of my college education. It'll take me many years of losing before I even am in the red.
The way I looked at it was I most likely would have to share the jackpot. In my case I'd have to cut the 10 mil in half. Then take out taxes and the lump sum penalty and that leaves me with about 2.5 mil to play with. I would be able to pay off all my loans, fix or replace the things that need it, and give to my favorite charity. I could then use the rest to retire comfortably and live on a very safe 3% and continue to have my nestegg grow. I could retire on less, but then I'd have to watch my spending and investing rather than living carefree.
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Re: $315M Powerball Winner is now broke
Old 01-24-2007, 08:46 AM   #45
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Re: $315M Powerball Winner is now broke

Quote:
Originally Posted by Laurence
I think it's a "Jackpot x chance of winning (in decimal form) > $1 argument. That is, if you have one in 80 million chance of winning, and the jackpot is 81 million, a ticket is worth slightly more than $1. Putting tax/lump sum/leeching relatives aside, of course.
I think they do a NPV calculation or something...

Karen
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Re: $315M Powerball Winner is now broke
Old 01-24-2007, 12:40 PM   #46
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Re: $315M Powerball Winner is now broke

When I win the lottery tonight here in Minnesota (approx. $240 mil) I will let you all know EXACTLY how it works!!!
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Re: $315M Powerball Winner is now broke
Old 01-24-2007, 02:14 PM   #47
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Re: $315M Powerball Winner is now broke


Some statisticians wrote a paper on this a few years ago. I think they looked at powerball, the expected value of a Powerball ticket rose to about 85 cents on the dollar at the 80-100 million range, then tapered off above that as the chances of having multiple winners increased. I recall the "base" expected value as being around 25 cents (i.e. for all the prizes besides the jackpot) and then the jackpot EV peaked at another 60 cents on top of that.

So: comparable odds to a slot machine, plus the entertainment value, makes it worth it to me to play small stakes by diversifying my portfolio.
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Re: $315M Powerball Winner is now broke
Old 01-24-2007, 05:58 PM   #48
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Re: $315M Powerball Winner is now broke

Quote:
Originally Posted by riskaverse
I used to play the lottery when I worked. I alway joined in the office pools because I knew it they ever won and I was not in, I would be so bitter for the rest of my life! It was more like insurance than a lottery ticket.
I joined our office pool. I figure if the VP and both of his directors are in it and two of them are PhD econometricians then we have to be winners.
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Re: $315M Powerball Winner is now broke
Old 01-24-2007, 06:26 PM   #49
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Re: $315M Powerball Winner is now broke

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Originally Posted by bssc
I joined our office pool. I figure if the VP and both of his directors are in it and two of them are PhD econometricians then we have to be winners.
Really?..........So how did that work out?
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Re: $315M Powerball Winner is now broke
Old 01-24-2007, 07:12 PM   #50
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Re: $315M Powerball Winner is now broke

Ask me again after the Powerball results are announced.
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Re: $315M Powerball Winner is now broke
Old 01-25-2007, 06:29 AM   #51
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Re: $315M Powerball Winner is now broke

I won...........

oops! wrong data, i got confused with the combination lock at the beach club.

nothing beats hard work and savings ....

"no such thing as short cuts "

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Re: $315M Powerball Winner is now broke
Old 02-10-2007, 06:23 PM   #52
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Re: $315M Powerball Winner is now broke

Okay, I didn't win last time. But I just bought $4 more in tickets for the drawing on Tuesday. After I win you guys can help me invest it 8)
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Re: $315M Powerball Winner is now broke
Old 02-10-2007, 07:34 PM   #53
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Re: $315M Powerball Winner is now broke

The guy got beat up.
His grandaughter and her friend overdosed on drugs.
Just goes to prove that money does not provide for happy endings.
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Re: $315M Powerball Winner is now broke
Old 02-10-2007, 07:58 PM   #54
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Re: $315M Powerball Winner is now broke

He was featured on a TV show "curse of the Lottery" with numerous other jackpot winners who failed to manage their winnings wisely. This other guy from Texas shot himself dead and a few others blew all their winnings while ruining their lives.

This Whittaker guy was robed twice when he left a suitcase with a half a million dollars in cash in his parked SUV........ Talk about stupid. The lottery commission should have assigned him a guardian before they gave him the money........
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Re: $315M Powerball Winner is now broke
Old 02-11-2007, 12:07 AM   #55
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Re: $315M Powerball Winner is now broke

Quote:
Originally Posted by kaudrey
I think they do a NPV calculation or something...
You compare the cost of the ticket to:

the present value of the after-tax discounted cash flow, multiplied by your chance of winning, and discounted by the chance that you may have to share the winnings with a second or even third winning ticket. If the value of all this discounted stuff is still greater than the cost of the ticket, then the expected present value of the investment is positive and it could be looked upon as a good investment even by those who aren't math-challenged. You will probably find plenty of other investments that look better from a financial point of view, but perhaps not from a daydream point of view! And in fact, the daydream ads are probably the most effective ones in selling lottery tickets!
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Re: $315M Powerball Winner is now broke
Old 02-11-2007, 11:36 AM   #56
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Re: $315M Powerball Winner is now broke

Quote:
Originally Posted by Corporateburnout
He was featured on a TV show "curse of the Lottery" with numerous other jackpot winners who failed to manage their winnings wisely. This other guy from Texas shot himself dead and a few others blew all their winnings while ruining their lives.

This Whittaker guy was robed twice when he left a suitcase with a half a million dollars in cash in his parked SUV........ Talk about stupid. The lottery commission should have assigned him a guardian before they gave him the money........
There's interesting theories about this. One is that unless people change their self-image they will always revert to the mean, i.e. how much money do I deserve to have? If they feel that they deserve to live a wealthy lifestyle, and believe they are meant to be wealthy but are temporarily poor then winning the lottery will give them a chance to do the things they were meant to do, whatever that is. But if they are living hand-to-mouth and have a scarcity mindset, then winning the lottery will become an uncomfortable experience and they will subconsciously do things to go back to a lifestyle that they are more in sync with, i.e hand-to-mouth.

I doubt it has much to do with being educated in personal finance or how to handle money. That would be the easy part. The psychological part is the deep, twisty area.
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Re: $315M Powerball Winner is now broke
Old 02-11-2007, 12:07 PM   #57
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Re: $315M Powerball Winner is now broke

Quote:
Originally Posted by Oldbabe
There's interesting theories about this. One is that unless people change their self-image they will always revert to the mean, i.e. how much money do I deserve to have? If they feel that they deserve to live a wealthy lifestyle, and believe they are meant to be wealthy but are temporarily poor then winning the lottery will give them a chance to do the things they were meant to do, whatever that is. But if they are living hand-to-mouth and have a scarcity mindset, then winning the lottery will become an uncomfortable experience and they will subconsciously do things to go back to a lifestyle that they are more in sync with, i.e hand-to-mouth.

I doubt it has much to do with being educated in personal finance or how to handle money. That would be the easy part. The psychological part is the deep, twisty area.
A few know what they want to do:

http://www.sptimes.com/2003/07/26/St...ner_was_.shtml

Sheelah Ryan, who won a then-record $55.1-million in 1988.
...
Ryan, of Seminole County, died in 1994 at age 69 after spending a generous portion of her winnings on setting up a charitable foundation that helps abused woman, gives scholarships to young adults, pays for job training programs and provides Meals on Wheels for the elderly.
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Re: $315M Powerball Winner is now broke
Old 02-11-2007, 04:29 PM   #58
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Re: $315M Powerball Winner is now broke

Quote:
Originally Posted by Oldbabe
There's interesting theories about this. One is that unless people change their self-image they will always revert to the mean, i.e. how much money do I deserve to have? If they feel that they deserve to live a wealthy lifestyle, and believe they are meant to be wealthy but are temporarily poor then winning the lottery will give them a chance to do the things they were meant to do, whatever that is.
I doubt it has much to do with being educated in personal finance or how to handle money. That would be the easy part. The psychological part is the deep, twisty area.
By that logic I'm still about nine figures short of achieving my potential.

Maybe 10 figures!
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