All I can think is that maybe they should play the lottery.

I’ll kick in a buck at the office if it’s for some huge pot, but it’s more for being part of the group and sharing an afternoon’s fantasy.

I can however understand positive expected value, something that goes through my head every time right after the flop, during a poker hand.

Sure, I’ll participate. How much will I participate? *shrug*

Let’s not get too carry away with these probability now. It hurts my head.

The number of winners in a lottery is given by a Poisson distribution. Since the payout is dependent on the number of winners, we must calculate the probability of other winners, GIVEN THE ASSUMPTION that you have won. That’s the conditional probability. The expected value of your ticket is the chance-weighted probability of all the permutations of winners/payouts.

As I recall, given 50MM tickets sold, the lottery has to exceed about $350MM before the expected value (post taxes, post pot-splitting) goes positive.

EV’s aren’t useful until the Law of Large Numbers begins to kick in though. ;)

Of course, I would take it if it was a positive expected value bet. However, I contend that it will never get to that threshold, after you take into account all those factors because they are all substantial negative factors.

On a more humorous note, I recall when the powerball was up to $300+ million and I was mentioning to a co-worker that it was still negative value because of tax purposes, etc. His idea, buy a ticket as an investment in his Roth IRA, to shelter him from the taxes. I thought it was a hilarious suggestion.

The expected value of a multiple-winner lottery can be estimated using a conditional Poisson probability distribution to accomodate the multiple winners. It’s reasonably straightforward to accomodate this hitch in one’s calculations. Taxes are even easier.

That’s not the point, though.

Once the payoff amount exceeds that magic threshold — after all the hitches have been accounted for — why wouldn’t an intelligent person take a wager with a positive expected value?

There’s a statistical explanation and an equivalent explenation that’s just common sense. I’m fishing for the latter.

As you already know, since more than one person can win the lottery, that makes it a negative expected value bet almost all the time (plus taxes, taking a lump sum, etc).

Megabucks may have better odds than the two lottery I mentioned, but the odds are still pretty crummy compare to other forms of gambling.  That’s not to say I support other form of gambling, it’s just.. you need to really need to distinguish for yourself if you view gambling as a form of entertainment or as a means to earn income. If its the latter, (and there are plenty who makes a living on gambling), people need to realize that state lotteries are not exactly one of the best way doing it.

Again, gambling is an iffy subject, but I can’t exactly say that people don’t make serious cash from table games such as poker etc. This isn’t about a couple of bucks now and then.. the post is mainly aimed toward the idea of regularly buying lottery tickets in the hope of cashing in. The odds just aren’t in your favor.

The accident odds is just the one I picked, I guess I should have went with the usual killed by lighting (or the killed in plane accident).. though I wanted something a bit more relatable. You’re right though, odds are pretty good with a car accident, though this is specifically a fatal one. I guess that’s still pretty good odds unfortunately. If someone can come up with a better example to really show the improbable odds of winning a lottery jackpot, let me know and I’ll change it :)

Occasionally, the jackpot balloons to extremely large sums. If the expected value of the payout exceeds the cost of the wager, wouldn’t an intelligent person elect to participate?

On the other hand, I do keep an eye out for lottery ticket coupons (we get them here in Seattle occasionally). A FREE chance to win scratch-offs or lottery money? I’ll take it!