The Mega number can be the same as one drawn in the first group. The first five are like a poker hand and their order does not matter. The Mega Millions game consists of picking five different numbers in the range of 1 to 70, and one Mega number in the range of 1 to 25. That group is people who are both rich and stupid. There is a select group of lottery players who do slightly better because their take from the smallest payoffs is exempt from tax. The smaller prizes are worth a little something, but barely enough to push the total value of a lottery ticket above a dollar. With a combined 42% tax, the expected payoff from the jackpot went down to 88 cents. The payoff table below assumes a 5% state and local hit. The state and local rate could be anything from 0% (such as in Texas) to 14.8% (in New York City).
The federal rate on a big windfall is 37%. The risk of having to share cut the jackpot value down to $1.52. There was a 32% chance of sharing with two or more other winners. Enough tickets were sold for the July 29 drawing that any winner was facing a 36% chance there would be one other winner, cutting the payoff in half. Next problem is that a winner might be sharing the loot. If that lucky stiff from Illinois wants it all at once, it shrinks to $781 million.Īlready, the expected payoff has dwindled to $2.58. The $1.34 billion prize is to be disbursed over 30 years. The first is that the advertised number is misleading. There are three reasons why a big jackpot is too meager to give your ticket a positive expected return. The winning numbers were 13, 36, 45, 57 and 67 for the white balls and 14 for the gold Mega Ball.īut there will more giant jackpots-since 2016 there have been ten of them bigger than $500 million-and each will attract a crowd of last-minute buyers. On July 30 the lottery operators revealed that there was a single winning ticket, bought in Illinois. If you must, buy one ticket, for fun, when you see a billion-dollar jackpot. No, and this essay will walk through the arithmetic of why. So, people buying an armload of them were acting rationally? It seems the expected payoff of a $2 ticket was better than $4.
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