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Q: Lottery Payouts ( No Answer,   8 Comments )
Subject: Lottery Payouts
Category: Miscellaneous
Asked by: dillbilly-ga
List Price: $2.00
Posted: 01 Jul 2004 19:45 PDT
Expires: 31 Jul 2004 19:45 PDT
Question ID: 368773
Given the propensity for multi-state lottery payouts to be massive,
i.e. hundreds of millions of dollars, what lump sum payout would,
after taxes, guarantee a profit if one were to buy every number
combination possible?  This assumes that there is only one winning
ticket sold for either the powerball or the mega millions lotteries.

Request for Question Clarification by hailstorm-ga on 01 Jul 2004 22:20 PDT

Are we to only consider the money amounting from winning the grand
prize, or should we also include the secondary prizes you would also
win from having every number combination possible? (for example, all
of the tickets where all but one number matches, matching all but the
powerball, etc.)

Clarification of Question by dillbilly-ga on 02 Jul 2004 07:29 PDT
I was only interested in the jackpot.  I hadn't even thought about the
other prizes you'd win in the process.  Figuring in the extra prizes
would be a nice bonus, kind of like those smaller prizes.
There is no answer at this time.

Subject: Re: Lottery Payouts
From: corwin02-ga on 02 Jul 2004 07:24 PDT
Mega Million jackpot

Odds of Winning

5 White Balls + MEGA BALL
JACKPOT**   (per $1 play)

5 White Balls  $175,000  1:2,649,920  

4 White Balls + MEGA BALL  $5,000  1:575,089  

4 White Balls  $150  1:11,276  

3 White Balls & MEGA BALL  $150  1:12,502  

2 White Balls & MEGA BALL  $10  1:833  

3 White Balls  $7  1:245  

1 White Ball & MEGA BALL  $3  1:152  

0 White Balls & MEGA BALL  $2  1:88  

Hence you would need to invest $135.145.920 dollars 

since price money is taxed at about 40% the jackpot would have to be
$225.243.200 to break even 

and this is assuming there are no double winners and you are willing
to take the anuity payout otherwise the odds get even worse
Subject: Re: Lottery Payouts
From: dillbilly-ga on 02 Jul 2004 07:34 PDT
Your math is slightly off.  When taking the lump sum payment you don't
recieve the full amount, but rather an amount that has been adjusted
for the devaluation of the dollar due to inflation over the 26 to 30
years of the payout plan.
Subject: Re: Lottery Payouts
From: corwin02-ga on 02 Jul 2004 07:48 PDT
I quote from myself 

and this is assuming there are no double winners and you are willing
to take the anuity payout otherwise the odds get even worse

Ergo !
Subject: Re: Lottery Payouts
From: hailstorm-ga on 03 Jul 2004 08:40 PDT
You would also need to take into account all of the time and effort
that would go into purchasing every lottery ticket.  You would need to
know how many lottery tickets a particular agent can churn out in a 24
hour period.  Assuming that this is far less than the number required,
you would need multiple people working at multiple agents to assure
that all possible tickets could be purchased...and I imagine that they
would not do this simply out of the goodness of their hearts!

Bottom line, purchasing every lottery ticket possible is not a winning
strategy, at least until the jackpot exceeds a billion dollars.
Subject: Re: Lottery Payouts
From: dillbilly-ga on 03 Jul 2004 09:33 PDT
This was intended as a purely hypothetical question.  It would be
impossible to actually buy all 135 million numbers in the four days
between drawings.  And, if you had read my original question I assumed
that there was only one winning ticket sold.
Subject: Re: Lottery Payouts
From: summer95-ga on 03 Jul 2004 16:38 PDT
The jackpot would need to be about $375 million just to break even.
This assumes a cash payout, which is around 60%, and being taxed at
about 40%. It's also quite doable in terms of covering the board and
financing the project. You'd need 10,000 people with $13,500 each.
(10,000 x $13,500 = $135,000,000) Each person would need to work 8
hours a day for 3 days filling out their share of the tickets. That
works out to 9.38 picks per minute which is quite easily done.

I'm thinking that each person would want to at least double their
$13,500 and at least cover for the contingency of two winning tickets,
hence the jackpot needs to be $750,000,000 to make it worth the risk.
Subject: Re: Lottery Payouts
From: hailstorm-ga on 04 Jul 2004 18:55 PDT
The recent Mega Millions jackpot of approximately $290,000,000 was won
by one person in Massachusetts.  According to the Boston Herald, a
lump sum payment of this amount after various taxes would be around
$117,000,000, about 40% of the announced jackpot amount.  So
summer95's figures seem reasonably accurate.
Subject: Re: Lottery Payouts
From: chrisward1000-ga on 07 Jul 2004 12:17 PDT
One of the main problems would be amassing a big enough team to buy
all the tickets because if you go to one shop where they sell lottery
tickets, it won't be able to print out enought tickets fast enough in
the allotted time.

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