Big money needed for big lotto winnings
With Wednesday's Powerball record-breaking $1.5 billion jackpot even higher than Saturday's $900 million, and with the potential to grow, Powerball fever is at, well, a fever pitch.
Even with the odds of winning at one in 292.2 million, with around 292.2 million potential winning Powerball combinations, people are still out buying tickets. David Kaplan, a math professor at York College, said people would have to shell out quite a bit to guarantee success and claim the big prize.
"To do that, to guarantee it, you'd have to buy every ticket," he said.
That means someone would have to buy 292.2 million tickets. At $2 a ticket, that would be $584.4 million.
"Just get a bank loan for $584 million in cash," he said, laughing.
Kaplan said, assuming the final jackpot is around $1.8 billion by Wednesday night and someone would have $584 million to put into buying tickets, the jackpot would bump up about $300 million, making it around $2.1 billion. If someone were to take a lump sum of the winnings, they would only receive $1.2 billion, as the lump sum only gives the winner 62 percent of the jackpot. That $1.2 billion would then be reduced to $744 million by federal taxes, leading to a total gain of $160 million, assuming there aren't any other taxes, according to Kaplan.
Not perfect: The plan is hardly foolproof, as Kaplan said there are a number of hurdles one would have to go through in order to do it perfectly.
"Even the logistics of getting the tickets are just so hard," he said. "It'd have to be perfect."
If someone were to purchase 10,000 tickets at each store, they would have to go to roughly 29,000 stores, he said.
“The best thing to do is to call up the lotto people and say, 'Hey look, I’m buying all the tickets,” he said, laughing.
Kaplan said there is a lot of room for error, especially when entering the number combinations.
"It's hard not to make a bunch of mistakes," he said. "Then you're out your $584 million."
Expected value: Kaplan said one reason so many people are going out and buying Powerball tickets who don't normally buy tickets is that the expected value is much higher on a ticket with such a high jackpot.
The expected value is the total amount paid in comparison to the winnings. In his scenario where one would pay $584 million to essentially win $744 million, the ratio between amount paid and amount won is 1.27. Since a ticket costs $2, the value is $2.30 for a ticket one would spend $2 on. Kaplan said that just about never happens.
“It doesn’t make you any more likely to win, it just means the total payout is way, way, better than it’s ever been before,” he said.
He said it's rare that the expected to value gets to one.
As for himself, Kaplan hasn't gotten a ticket for his one in 292.2 million chance at winning.
"I might, I want to get my 30 cents back," he said.
— Reach Christopher Dornblaser at email@example.com