Mega Millions

[GrayHare]

I think the odds of the big prize are about 250 million to 1, so with the payout now $476 million the Mega Millions lottery might for the moment actually offer close to a statistically reasonable return after taxes.

I've long thought that if a lottery wants to attract a different clientele the prize should be no taxes for life.

 

[soupcxan]

Actually 175M:1 per wikipedia. An NPV positive lottery? The more tickets I buy, the higher my expected return. Sounds great (on paper)!

 

[RunningBum]

What are the odds of multiple winners?

And don't forget that $476M is for payments over 20 or 25 years. If you want it lump sum I think you get around 55 or 60%, then pay taxes on that.

On the other hand, the jackpot isn't the only prize.

 

[GrayHare]

According to a CNN update the jackpot has risen: "Friday's $500 million prize is payable as an annuity over 26 years. If a winner prefers, he or she could choose a one-time, lump-sum payment, which in this case would be $359 million. Both figures are before taxes."

If anyone here wins the jackpot, I'll be happy to accept a 10% finder's fee.

 

[Major Tom]

Hmmm...... 359 million minus taxes of approx 125 million leaves 234 million. At a conservative WR of 2%, that would pay me a little over 4.5 million a year.

My rent is $640/month, groceries about $300, phone and DSL $30, annual bicycle maintenance around $50. I have no debt.

I think I'd be OK - might even be able to fit the occasional trip or two in as well

 

[devans0]

I think the odds of the big prize are about 250 million to 1, so with the payout now $476 million the Mega Millions lottery might for the moment actually offer close to a statistically reasonable return after taxes.

I've long thought that if a lottery wants to attract a different clientele the prize should be no taxes for life.

Didn't GM win that lottery?

 

[farmerEd]

My wife keeps warning me that if we won a prize like that it would cause problems for us...I just don't see it. I think I could handle an instant, massive infusion of wealth pretty easily...and I am perfectly willing to risk it.

 

[frayne]

Like someone has said before, the lottery is a tax on people who can't do math.

 

[Walt34]

Hmmm...... 359 million minus taxes of approx 125 million leaves 234 million. At a conservative WR of 2%, that would pay me a little over 4.5 million a year.

My rent is $640/month, groceries about $300, phone and DSL $30, annual bicycle maintenance around $50. I have no debt.

I think I'd be OK - might even be able to fit the occasional trip or two in as well

And you'd still be able to easily afford the $44k Hassleblad camera to record the event. Hasselblad H4D-200MS Digital Camera 70490520 B&H Photo Video

 

[Nemo2]

Like someone has said before, the lottery is a tax on people who can't do math.

We buy tickets, (in Canada there's no tax on winnings), on the premise that the little we spend/waste has no impact whatsoever on our finances, but a win, (especially a large win), would have a positive effect on the many people with whom we'd share it.

 

[Ed_The_Gypsy]

Yes, it is stupidly unlikely.

But it is only the cost of a cup of coffee. And I can afford a couple of tickets. So blah! I have blown more on dumber things. Like really bad cups of coffee.

 

[Nemo2]

Yes, it is stupidly unlikely.

It all depends on how you choose to look at it - we think it's 50-50....we either win or we don't.

 

[EvrClrx311]

As others have eluded to, the odds for a lottery are never in your favor... because as the prize goes up the number of people playing does also. If anyone could ever prove a statistical advantage (payout of 0.0001 for every 1$ bet on average...) then a billionaire would just buy up one of every single ticket and walk away with a 0.01% guaranteed return on investment.

The nuts and bolts of it is that when the lottery payout exceeds the odds of winning, you will most often find multiple winners. That isn't to say you might get "lucky" twice in being the winner and also having no one else win at the same time... but from a statistical point of view, your odds haven't really improved.

In some cases, you could actually be at a disadvantage, because with a record jackpot there are sometimes so many tickets bought that it is 'expected' at least 2 or 3 winners exist out there, for any random set of numbers.

It always comes back to taxes also... the lottery is simply a gamble. I read an articles a few years back that stated that if every American who played the lottery invested the money into an index fund instead... we'd save billions a year in social programs to support the lower 10% (who are the most likely to play)...

of course, the lottery pays for a lot of things... like schools - so that would have to come from somewhere else.

 

[GrayHare]

The smaller, non-jackpot prizes offset the reduction in expected payout due to multiple winners, but the exact calculation of that offset is non-trivial. Even so, this is a rare lottery moment at which, for a single jackpot winner, the math says the expected return on a $1 ticket is greater than $1.

I suppose the master Mega Millions computer knows what number combinations have not yet been selected by anyone, but it's not going to share that info with us.

 

[glippy]

The winner would still be posting on here asking if they have enough to quit their job or if they should stay on for "just one more year."

 

[NW-Bound]

...to quit their job...

and still have money to hire someone to do work like this, instead of doing it themselves?

Would it be the same thing?

 

[ducky911]

Hurry need to know?
My state tax is 9%....can i move to nevada before i claim my prize and pay no state tax...i am feeling lucky?

 

[powerplay]

Hurry need to know?
My state tax is 9%....can i move to nevada before i claim my prize and pay no state tax...i am feeling lucky?

Give it a try and report back. We'll be waiting to hear the story.

 

[Major Tom]

My wife keeps warning me that if we won a prize like that it would cause problems for us...I just don't see it. I think I could handle an instant, massive infusion of wealth pretty easily...and I am perfectly willing to risk it.

I came to the same conclusion as your wife eventually. IMO it's just too much money to come into suddenly like that. Obviously, few of us on this board would have a problem generating an income to live on from a sum of this magnitude but for me, the potential problems wold come from:

a) Deciding who to give money to and how much
b) Denying money to some who want it and the fallout that may come as a result
c) The feeling that this isn't really my money as I did nothing to earn it or grow it into that sum

I think that I could possibly find a way to handle a) and b). The counter-argument to b) is that it's a good opportunity to find out who your real friends are. As for c) I'm not sure if I'd ever feel as if it was really my money. If I'd earned that money from real estate deals, investing etc, it would feel like mine, but not when my only labor was to buy a lottery ticket.

Coincidentally, there's a comedy-drama series that just started on BBC television called The Syndicate, that depicts a group of supermarket workers who form a pool to play the lottery and end up winning the jackpot between them. I've only watched the first episode (I think it's the only one that has aired so far) but it looks as if the drama of a group of working class folk who suddenly come into a lot of money is going to be thoroughly explored. You can watch it on the BBC iPlayer. If you're outside the UK, you need to go through a proxy server.

PS - My thinking on this is constantly evolving and I'm beginning to think that I could handle a sum like this. I'd be strict about the sums that I'd give to close family members. Then, I'd set aside an amount to generate my living expenses. It would be enjoyable to use the rest to donate to charities. Just the work involved in figuring out the good ones could be quite engaging.

And you'd still be able to easily afford the $44k Hassleblad camera to record the event. Hasselblad H4D-200MS Digital Camera 70490520 B&H Photo Video

A 50MB sensor that is 4.5 x 6cm in size? I think I just drooled into my morning cup of coffee. Imagine the beautifully detailed landscapes you could shoot with that!

 

[NW-Bound]

See how just the thought of all that money brings out the lust in us? A $44K camera?

Should I refer everyone back to the concurrent thread about "frugality in ER"?

What's the chance of one of the 50 megapixels going bad? That would drive the perfectionists among us insane, and they would have to toss that camera and buy a new one.

I remember when LCD displays for PC just came out, they all came with a caveat that the warranty would not apply unless so many pixels went bad. I have not seen an LCD with a bad pixel for a long time now.

 

[tryan]

Always said I don't want to be known as the "lucky b@stard" who hit the lottery. Much more respect in earning it.

And I am pretty good at math ... no, I don't play.

 

[Major Tom]

See how just the thought of all that money brings out the lust in us? A $44K camera?

Should I refer everyone back to the concurrent thread about "frugality in ER"?

Trust me, I wouldn't actually buy that Hasselblad, but it wasn't so long ago that the film vs digital debate was raging and the pro-film camp were adamant that digital would never even approach the quality of film. At some point, it was conceded that digital was as good as 35mm (I'm simplifying the debate here) but it would never be as good as medium or large format.

I love the thought of a digital image with such good color saturation and resolution but even if I could easily afford it, I wouldn't buy one, as it doesn't suit my style of photography (i.e. I need something smaller and lighter and that costs considerably less than 44K, regardless of my income level!)

PS - a 44K Hasselblad could actually be considered frugal if there is a demonstrable need for it, it fits easily into the budget, and there is no other camera that will perform the task while retaining a good resale value etc, for less money. Frugality is not about spending the very minimum, it's about using your resources as wisely as possible.

 

[NW-Bound]

Just teasing.

If somehow, a few hundred million fell on my lap, no, make it any amount of money, I would not refuse it. And if I could easily afford that wonderful camera, I might just buy it to see what it is all about, even though I am not an avid photographer.

But seriously, I strongly suspect that as a centimillionaire, I would get less enjoyment out of the $44K camera, compared to how I am enjoying my lowbrow and trustworthy Canon SX210, which cost me less than $300 and sports a grand total of 14 megapixels and a wonderful 14X zoom.

 

[Independent]

My wife keeps warning me that if we won a prize like that it would cause problems for us...I just don't see it. I think I could handle an instant, massive infusion of wealth pretty easily...and I am perfectly willing to risk it.

+1

 

[Independent]

I can calculate that the total payout is just a fraction of the total amount gambled. But, at the same time I can justify spending the buck just for the enjoyment of imagining what I would do with the money. The utility of the imagining is worth more than a dollar.

However, I'm the lucky sort who can imagine what I would do with the money even without buying the ticket. So I keep my money.