Can you feel the excitement in the air? If you live in one of the 44 states that plays Powerball (or the District of Columbia or U.S. Virgin Islands) you know that the reason everyone feels abuzz is because we’re once again about to set a new lottery jackpot record! Right now, the Powerball jackpot is expected to be $700 million on Saturday!
Let me say this: Gambling is a terrible idea. Controversial, I know. There is no worse investment you can make then putting money into scratch-off tickets, slot machines, or the lottery. I really do hate it on a base level.
I would be happy to see every casino get run out of business. I’d ban the whole lot of them. You can call it legislating morality, but as an economic factor, casinos do nothing but damage, despite what their marketing says, and I wish we could just protect people from themselves and their worse instincts. I’ve been watching with glee as the casinos in Atlantic City shutter. And I’ve been watching with horror as casinos, counter-intuitively, get approved and built in upstate NY.
Cookies and scratch-off tickets. A mainstay of any Christmas.
That said, about once a year, I go to Saratoga Racetrack and bet on horses. And also once or twice a year, I play the lottery.
What am I, a hypocrite? Yes I am! But let me explain my two reasons for playing the lottery.
Betting on the horsies
1. When the jackpot pushes past a certain amount, the expected value of a ticket passes its purchase price.
For Mega Millions, the chances of winning everything are 1 in 259,000,000. Assuming that each ticket sold is made of randomly selected numbers, you can divide the jackpot by the odds (the number of possible number combinations) and find the expected value of each ticket. So if the jackpot is $17 million, the expected value of each ticket is almost 10 cents. Once it jackpot crosses $259 million, the expected value passes $1. Powerball tickets cost $2 each, and the odds are 1 in 292 million, so the jackpot actually has to pass $584 million in order for the expected value to pass the purchase price.
So that’s a good deal, right? Well no, not really, since more people are playing when the jackpot gets so large, there’s a better chance of multiple winners, and splitting the pot. But I use this funny math to rationalize to myself a few times a year when I’m “allowed” to play the lotto.
2. I seen it happen.
I’ve seen people win the lottery. And it was a big one. It was a big lottery. When I heard where the winning ticket had been sold, I nearly had shat pants because it was a store I shopped at. When it turned out that I knew the people who won, I nearly had an existential crisis watching them immediately retire. Why? Because, irrationally, it felt like I had come close to winning.
A friend said seeing people win the lottery must feel like seeing a car wreck. All of a sudden, you’re confronted with this random thing, and the reality of it makes it seem so much more likely to happen to you. You just picture yourself in their shoes. I played out different scenarios in my head of how I could’ve been in on that winning ticket. It’s true! People do win the lottery! I seen it!
And I’d be lying if the lottery incident wasn’t another thing that strengthened my resolve to save money and retire early. The unfairness of it all, random people getting presented with huge, goofy checks. I’ll show them! I’ll get there on my own!
And if there was a third reason, it just might be marketing. I don’t know if other states had this jingle, but in Connecticut in the 1990s, we had a lotto jingle that went: “You can’t win if you don’t play.” Well, I guess that’s true for literally everything, but it’s still true!
Since there’s no chance of winning the lottery, the only reason it exists is so you can daydream and discuss what you’d do with those hundreds of millions, right? So what would I do with the money? First, I’d take the cash, not the annuity. You can’t swim in an annuity! Actually, you probably can’t swim in dollar bills or coins, despite what the cartoons teach us, so that might be a non-starter anyway. But I’d still take the cash, $400-something million, less after taxes, and I’d start buying buildings. I’d turn my little dilapidated downtown into my own version of Monopoly… but in a good way! We have a lot of historic buildings that are slowly decaying, so first order of business is that I’d restore all of those to their original condition, and sell them back for whatever I bought them for. Like a tooth fairy, but with bricks, or something