Money

How to Win the Lottery OR: The Least Efficient Way to Make Money

Don’t worry, I’m not here to tell you not to buy a lottery ticket. Oh no, I’m here to encourage you.

Yes, there is a lot wrong with lottery systems. They are pretty much a tax designed to prey on people who can’t math. And the poor–since poor people, you know, generally like entertaining the thought of not being poor. Mathematically the amount you stand to gain from buying a lottery ticket is almost exactly that ticket’s price-tag–but in negative dollars.

Never mind all that. Never mind the odds against you, you want to win. As far as I can see, there are two ways to be absolutely positive that you will win a lottery without cheating: either open up a lottery and attract customers or find a way to collect every possible ticket. Let’s deal with the second option.

Now, the classic lottery system is to draw a winning ticket number from all of the tickets sold. If there are a limited number of tickets, one could conceivably buy all of them and thus ensure a 100% percent chance of winning. However, if just one other person buys just one other ticket, your odds of winning will be incredibly high but not assured. We don’t deal with not assured in this blog. The second problem is that lotteries are designed to make a profit for somebody, so there is no way that the total sum of the prizes will be worth the total sum of all the tickets sold, excepting, perhaps some sort of lottery for charity.

So we have to look at lotteries that follow a different pattern. Powerball, for example, is what is called a progressive jackpot. There is one winning combination of numbers, and so long as no one guesses it, each week this jackpot increases. What this means is that, with enough tickets, a single person can be absolutely assured of winning the jackpot.

Players choose 5 non-repeating numbers for the white balls and one number for the red Powerball. The final results are automatically placed in ascending order, effectively making this a combination and not a permutation (that is, the order numbers are chosen is irrelevant), making the odds of winning 1 out of 175,223,510.

Again, I’m not discouraging you, but you’re just wasting your money with those kinds of odds. To put it one way, there are about 3.4 million High Net Worth Individuals (HNWI–those that have at least $1 million in wealth) in the US out of a total of 316 million people, making it, roughly, 1.7 million times more likely that a random American is already a millionaire then that the random ticket they are holding will win that week’s Powerball.

In order to have a 100 percent chance of winning you have to buy all 175,223,510 tickets. Each Powerball ticket is $2, meaning that you need a payout of $350,447,020 to break even. The rules state that you pay taxes on lottery winnings based on where you bought the ticket, so in order to make this venture as profitable as possible you’ll want to buy all 175 million tickets where there isn’t a state lottery tax: Delaware, Florida, New Hampshire, South Dakota, Tennessee, Texas and Washington.

Even so, there is always a 25% Federal Lottery Tax, so you’ll actually need to wait for an advertised jackpot of at least $467,262,693.34, something that has so far only happened twice. People that actually do win American lotteries have to choose between getting a severe reduction in payout or receiving the full winnings over 30 years. You’ll have to choose the second option unless you want to wait for an even higher jackpot.

Now then, now that you have collected your $350 million to invest in lottery tickets, you have a week to buy all 175 million of them. But, if you were able to purchase a Powerball ticket once a second, you’d still be 174,618,710 tickets short at the end of the week. Even Ayn Rand is gonna ask for help on this one.

Time for the 175 million person lottery pool. Of course this number can be substantially less if each person is allowed to buy more tickets. The problem is that people tend to forget about the whole lottery pool contract after they win. So you need a contract, signed and notarized. And you’ll still probably have to sue. All of this will cut into your winnings. Also make sure to have 175 million copies of lottery tickets to make sure no one can say they bought the ticket with their own money and try to not split it. Finally, if you’re playing something like Powerball, start hoping right now that no one else chooses the jackpot.

Okay, so your group won. You chose the 30 year payment plan, meaning that someone will have to have a full time job divvying out 175 million shares once a year for thirty years. But it’s all worth it! The highest Powerball ever got was $600 million. This is a lot of money. So much money, in fact, that after taxes every $2 share you purchase is going to be worth a whopping $2.57, paid back to you over 30 years. It would take about 23 years just for you to get your investment back.

Still, though, a 25% return sound like a pretty good bonus to being able to say you once won the Powerball Jackpot. So if 175 million of you are bored next time Powerball is that high, hit me up.

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