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Powerball Jackpot at \$340M, Don’t Play

Posted By Jim On 10/18/2005 @ 7:59 am In General | 2 Comments

You know how they say that the lottery is the poor man’s tax? Usually the jackpot doesn’t come close to giving you the payout you need to get the correct odds to play — until Powerball. According to the Powerball Lottery officials, the odds of winning the jackpot are 1:146,107,962 and with the price of a Powerball ticket at \$1 (the \$1 Powerball PowerPlay doesn’t affect your jackpot, but chances are you’d play it if you are going to get a Powerball ticket), you need a payout of \$292,215,924 to justify playing given those odds. The jackpot is at around \$340M so technically isn’t the correct play actually to play the lottery in this case?

Actually, no and here’s why:

1. Splitting the Pot: The flip side of the coin is that there will be lots of people who will also be playing and the chances of you splitting a jackpot increases as the payout increases.

2. Annualized Payments: Since you can take your payout as a lump sum or annualized over thirty years, a \$125M cash jackpot can be advertised as \$247.25M because you’re going to be paid out over 30 years. In actuality, if you were to take the lump sum of the advertised \$340M you wouldn’t get nearly that much and then the odds aren’t in your favor.

3. Taxes: Did you think the U.S. Government wasn’t going to want their share? You don’t get to keep that entire \$340 million (or smaller lump sum fraction of that).

4. Winning The Lottery Sucks: Yeah the money’s good but check out what happened to the guy who won the last huge Powerball lottery jackpot [3]. Just think of Hugo from Lost [4] and his good fortune.

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