How to Win the Lottery Without Having to pay a penny for the Ticket

Good Luck!

What would you do in the event you won the Lottery?

That’s a great question. One that we’ve ALL fantasized about at least as soon as and probably have let our imaginations go wild in at least one conversation with friends or family. I’m not talking about scratch and win lotto tickets here. I’m talking about the large kahuna.


You are probably in the stark minority in the event you haven’t at least played that game once. Following all, it’s completely justified! You could, no, you need to be that 1-in-500,000,000 simply because you have worked hard your entire life and nobody deserves it like you do – so what’s an additional dollar, or two, or five?

To create things much more confusing you will find two ways you are able to take your jackpot winnings. You are able to take your winnings instantly in one lump payment, or you are able to take your winnings in 30 equal annual payments spread out over 29 years. The first is called the cash choice, the second the annuity option.

The advertised value of the annuity option is generally almost twice the size of the cash option due to the interest that builds up over 29 years. The lottery buys US government bonds to cover the annual annuity payments. Therefore the distinction between the cash and annuity options depends on the interest rate.

Just how much the annuity is actually worth is really a question for an economist, not a statistician. What an economist would call the “present value” of the annuity is much much less than its advertised value, because if you had that much in money and invested it (say in US government bonds like the lottery does so there’s low risk), you would get a lot much more back in equal annual payments over 29 years. On the other hand, the present value of the annuity is more than the money choice, simply because you pay less in taxes on the annuity, and the interest on the annuity is earned before taxes. To maintain issues simple, we will think about that the present value of the jackpot is the value of the cash choice. That understates the value a bit, but is closer than taking the advertised value of the annuity.

Let’s get back to that dream for a second…
The Lottery Dream Fantasy

When we have our lottery fantasies, the conversation often revolves around what we would purchase. It may look some thing like this:

How much you win depends on how many other winners you have to split the prize with. When the jackpot is small and the number of tickets sold is much smaller than 146.1 million, an analysis like the 1 above wouldn’t be far wrong, because the opportunity of multiple winners is negligible. When the jackpot is massive and the number of tickets sold is a sizable fraction of 146.1 million, multiple winners are likely, and we need a much better analysis.

How much you win in the event you win depends on how many winners there are. So we need to calculate the probability distribution of the number of winners. (Much more pedantically, we need to calculate the conditional probability distribution of the number of other winners given that you win. Fortunately we don’t need to be concerned about the distinction, because both distributions happen to be the same.)

On the surface, that sounds fantastic, right? Then why do so numerous retirees who could comfortably live off their pension or other retirement savings select to keep on working? They’ve earned their Lottery ticket, damn it!! Be lazy and go appreciate the precious little time you’ve left!!

They keep working simply because they like what they do, or they like what it does for them. They might get paid, they might not – but they are still active and productive members of society. They’re not sitting in their gated mansion in a dark room counting their dollars.

Discover more about how to win the lottery guaranteed and how to win the lotto

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