There have been some posts under another subject line as to whether or not the lottery is a "good play" or not. Of course, it almost always is not in terms of positive EV.
However, at 175,000,000 to 1, and figuring cash option and taxes take you down to about 30-35% of the stated jackpot, a jackpot of $500,000,000 or more is approaching break-even EV. That's pretty close to what the latest winner hit, but that was a record.
Of course, this rough estimate includes an (unjustified) assumption that there is only one winner, and a disregard for all the smaller prizes.
Personally, I am willing to take the worst of it with an occ. Powerball purchase -- but I do wait for jackpots of $200,000,000 or more before I buy. I'm still figuring I'm giving away half to three fourths of my money if I do this forever, but in my lifetime, it's not the worst way I've ever wasted money, and it's certainly the only way I'm going to get $50 million in my bankroll :)
I cap my purchases at $20, so it's not going to put much downside in my lifestyle. I do feel sorry for people who understand this so poorly that they (literally!) mortgage the house and buy thousands of tickets. It's no MORE stupid than what I'm doing, but the SCALE is much larger, and therefore they are left hurting when they don't win, while I don't even notice that I have $10 or $20 less in my pocket that week.
--BG
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