My dad has a pool at his job, they only play for a jackpot of 75 million or more. I think that is obnoxious, being that any amount would be better than none. Tomorrow’s megamillion’s jackpot is 12 million, that’s plenty for me, how about you?
Although it’s true that the lottery commissions often have a specified percentage of the sales going into the jackpot and parimutuel prizes, and that this is often 50%, the actual expected return on many of these games are quite lower and vary as the number of people purchase tickets and the prizes roll over. I took a historical draw of the game Lotto Texas once and worked out what the expectations had been on that draw and it worked out to a 35 cent return on the dollar. But in terms of doubling your target jackpot simply because you know they are likely to keep 50% of the sales isn’t called for, first it’s already taken into consideration in calculating the expected return so you would simply be factoring it in twice and second the funding is from previous sales and an estimate of the current sale.
Expectations are also quite misleading. When Canada’s Lotto 6/49 first hit 14 million back in the early 80′s, people actually took out second mortgages on their homes to purchase tickets simply because the expectations reached parity and many people would risk millions in their business life when the odds hit parity but you have to remember that it’s still a 1 in 14 million shot of hitting that jackpot. Basically, it doesn’t really matter if the jackpot is high enough to give you better than parity expectation because chances are you won’t get that jackpot unless you play millions of draws which would take millions of years perhaps billions as not every draw would have a jackpot large enough to play under those guidelines. In truth, it’s the first million that will change your life the most not the second third or 100 hundredth million.
It’s useful to breakdown the expectations into the prize levels and then you can see how much you’re likely to realize. I do this for scratchoff games where for a given dollar value in tickets, I filter out all prizes that I have less than 50% chance of winning and look at that expectation. This steers me towards the games with more smaller prizes that you’re more likely to win such as the $2 Snow Dough game. I also rate the scratchoff games on a logarithmic scale for prize values and odds as it’s magnitude that’s more important than the actual return i.e: the difference between a 50 million dollar prize and a 100 million dollar prize win really wouldn’t be a difference in terms of standard of living so I shouldn’t evaluate the latter as twice the former. Logarithmic scales are used for Earthquakes and Hurricanes because they put the actual significance of the values into perspective.
I would agree that only playing for the large Jackpot based upon expectations is foolish unless you expect to be able to play millions of draws, what matters is if the prize is large enough to improve your life. You’re probably right to play for the smaller jackpots if you are going to play at all. Participating in more draws betters your odds of winning something but so does saving it all up for a single draw. Ultimately, the best thing is to save up what you would spend and then not play it in any draw thereby assuring that you have at least parity in your return.
The 12 million jackpot is plenty for me but the Lotto Texas draw on Wednesday is for 50 million and the odds are 1 in 25 million instead of 1 in 175 million. I believe I’d be spending my money on the Wednesday draw not the Tuesday draw.