Tonight’s Mega Millions Jackpot is $1.1 BILLION. I’ve been studying the inner workings of the lottery industry for years. AMA about lottery odds, the lottery business, lottery psychology, or no-lose lotteries

What are the actual odds of winning various lotteries?

The state lotteries generally pay you out less than 50 cents on every dollar that you put in ... the odds are terrible. The worst EV of all the gambles you can do pretty much.

Wait, are you saying the prize payout percentages are less than 50%?

Yes exactly

What ‘additional math’ are you doing to get those numbers? State lotto prize payout percents are public information, and the median is nowhere near below 50%.

I'm talking about the PowerBall and MegaMillions primarily, which have worse odds than other games. You also have to factor in taxes

Just glossing over the fact that isn’t what you implied above… why factor in taxes? Does Yotto include the how much a player will lose to taxes in their prize payout percents?

Or is that math you only do on state lotteries to make their numbers look worse compared to yours?

Never commented on our returns versus the state lotteries. Just answered a question about the odds of the state lotteries. If you ask me a question, I'll answer it directly.

Why factor in taxes? Because you're using post-tax dollars to buy the ticket so it makes no sense to not use post-tax dollars when calculating the return. I would advise anyone to do the same post-tax analysis everywhere for anything.

So, yes or no, does Yotta include how much a player will lose in taxes in their prize payout percentages?

We include APY averages as a pre-tax percentage. Everyone has different tax rates. I'd encourage anyone to do the math on their post-tax returns for anything.

The average household spends 640$? Maybe because I'm upper-middle class, but I don't know anybody who regularly buys tickets (or at least admits/talks about it). What's the average spending in households that spend at least 1$ on tickets?

Lotto is run by state governments, and I believe a lot of the proceeds go to fund those governments. Isn't this better than gambling corporations making the profit? If we shut down all the lotteries, wouldn't people looking to get rich quick start throwing their money at for profit gambling businesses instead?

About 50% spend at least $1 once a year on tickets. So of households who play, it's actually around $1k per household.

Yes it's better than corporations but it's not better than not spending the money in the first place!

A couple of questions from someone who never plays the lottery...

1. What is a "No-lose lottery"?
2. What is a "Prize-linked Savings account"?

My grandmother was addicted to gambling, whether that be Bingo night, Lotto, or Scratch-offs... It drove me crazy to see someone on a fixed income with zero savings wasting money on something with such horrible odds... Seemed so illogical. I understand that lotteries are beneficial to governments as a form of raising revenue, but it raises that revenue from the people who can least afford to pay it, rather than just taxing the wealthy...

1) It's basically a type of lottery where even if you don't win, you didn't lose anything. Free to enter effectively

2) A PLS is an account where you earn tickets to win prizes just by saving money. You don't need to buy anything.

Very common in lots of other countries but new to the US

1. How does that even work? If you can enter for free, where does the prize money come from? Lotteries work because if 99.99999% of people lose, their money is what provides for the prize money as well as the additional revenue to support the State government/Schools/Shop that sold the ticket.
2. Same as #1.

It's not "free" it's just using your interest as payment instead of direct money.

Yeah there's opportunity cost. But still free in the way society views free. Everything has opportunity cost. If you go for a walk in the park, it's free right? But you could have been working an hourly job for $x so no it's not free.

So yes, technically, you're right.

It comes from revenue generated from interest on the account balances

How does the return on these accounts compare to interest rates on savings accounts?

depends on your luck, you could win $500 one day, then $0 for a week, but on average we expect accounts to earn around 2.7%.

Why not make a thousand millionaires rather than one billionaire?

It doesn't market as well in advertising.

So we put money in your “savings account” so whoever does win you pay them with our money. But we think “our money” is still there. And if we ask for it, you just go and grab money from the next person abs give it to us.

If we literally never lose money and only gain. How do you make money?

I smell a Sam Bankman-Fried type scent here.

Maybe I’m wrong. But this is just weird. Very weird.

We make make money from interchange revenues and interest, similar to how banks make money. This is what funds the prizes.

OK, shouldn't it be Kilo millions (10³ millions)? Mega Millions would be 10⁶ millions, or a trillion. False advertising!

I think you have a solid lawsuit on your hands!

whos's really spending $$$$$ on the lotto???

my perception of my 400 friends on facebook would be maybe $20-100/person a year avg

Unfortunately some of the population who can least afford it are: "28 percent of Americans who earn less than $30,000 a year play the lottery at least once a week. They spend $412 a year on tickets." source: https://www.cbsnews.com/news/who-buys-lottery-tickets-those-who-can-least-afford-them/

which has the best odds.. picking my own numbers or having them automatically picked?

It's the same - purely random.

Are state lotteries just ways to tax the poor?

I'm not sure if they're by design ways to tax the poor, that would be a pretty cynical take.

That said, lotteries tend to be a regressive (and inefficient) tax, disproportionately impacting low-income people.

At the same time the lottery preys on people's hopes and dreams offering the false promise of a better life, which can be especially tempting for people who are struggling financially.

Despite the odds, would it still be advantageous to buy one ticket?

Depends on your goal. If you want some entertainment, go for it. But you're going to lose most likely

But realistically, if I play one ticket whenever it's over $500 million for the off chance of winning, what could it hurt? Someone has to win it eventually, right?

Yeah, but odds and the math is reality. And you're likely to lose over 50% of whatever you put in.

I see what you're saying, but what is $2 for the extremely slim chance of winning $1.1billion? Not to mention the various other winning combinations that could happen on that same ticket. Walking away with even $1000 or whatever the secondary prizes are is more than enough to justify spending $2.

I agree. It's fine. Just know it's entertainment and not a good investment

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I don't know what you mean

How can you say you are more likely to be crushed by a meteor than win Powerball when numerous people each year win Powerball, but I don't think anybody is crushed by a meteor. What numbers back up that claim?

really just the risk of a huge meteor wiping out everyone

https://www.discovermagazine.com/the-sciences/death-by-meteorite

Only one person has ever been struck by a meteorite and they weren’t crushed. But there are 1129 Powerball winners. Just saying… I’m guessing you already knew that, though? Since you’ve done so much research and all…

Most of the risk comes from the possibility of a large scale event wiping out tons of people.

https://www.discovermagazine.com/the-sciences/death-by-meteorite

We recently remodeled our garage and in the storage room there was a lot of junk. In that mess there was a pretty good size bag from a clothing store at the mall. Inside was filled with my dad's lotto tickets. The entire thing was filled with tickets. How much do you think it was worth in terms of money spent? I wanna say 1M.

Wow, he really saved all of his lottery tickets?! That's wild. I'm going to guess $126,354. Report back if you end up counting all of them :)

Lotteries seem often to be thought of as a benign form of gambling, with a slow rate of play, and lacking many of the mechanisms which casinos and online gambling use to encourage higher stakes and more frequent play. Is that fair? Or are there things lottery operators do which could move people into problem gambling?

I think that's a fair take, I also think it's oftentimes an intentional decision by lottery operators. Compare Powerball to a casino and Powerball looks way less destructive in comparison.

Lottery marketing has often pushed the narrative that lottery revenues provide funds for important causes like educational funds and services for the elderly which help sell the lottery as a net societal good, not a societal harm, convincing people that they're not losing money.

Scratch off tickets are designed to be addictive, easy to carry with you, flashy. Lottery operators have also tried to make buying tickets as simple as possible, installing vending machines at gas stations and grocery stores and turning to online platforms to sell tickets, too.

how much of the revenue the lottery generates goes back into prizes?

varies by state, in California 50.2% of Powerball revenue goes into prizes. In New York it's something like 51.5%.

How often are jackpots split between multiple winners? Or more to the point: how do I account for the possibility of multiple winners when calculating return-to-player?

When the jackpots get very big, it's quite common to get split between multiple winners because so many more people participate when it's this big.

When jackpots are lower, fewer people play, and there are far fewer splits.

Could you DM me the winning numbers for tonight? Please and thank you ☺️

try 1 2 3 4 5 6 7

Lol thanks! And now for my serious question…Do you believe there could/should be a limitation or rule in place that restricts highly populated states (Ex. California) from continuously winning? I feel like, more often than not, we hear the same states win over and over…

No! It's a random outcome. More people who participate, more likely winner will be there. California has 40 million people. Plus Caifornians might play the lottery more than ppl in other states due to advertising etc.

Which has the better odds, Scratchers or the actual picking numbers lotto?

Scratch off tickets usually have better odds of winning a prize than Powerball or mega millions tickets. But those prizes tend to be smaller than the Powerball or mega millions jackpots.

What’s the best way to win the lotto?

The best way to win something like Powerball or Mega Millions would be to buy a ticket for every single combination of numbers possible. You probably wouldn't make money on it, but would be the best way to "win" the lottery.

Is there good data on how many tickets get sold for drawings with huge jackpots? My understanding was that roughly a dollar of each $2 ticket fed the increased jackpot from drawing to drawing.

Where is the crossover point where multiple jackpot winners begins to become more likely?

Is there a psychological element to choosing numbers to reduce the likelihood that others split a jackpot with you? (Example - avoiding lower numbers that come up in birthdays, for example). Or are there so many quick pick tickets that chosen numbers are a drop in the bucket?

I think I remember seeing some numbers on Powerball jackpots that for a $100 million jackpot they on average sold 200 million tickets. For their $1.586 billion jackpot back in 2016 Powerball sold 758 million, so yeah, a sizeable difference in the number of tickets sold between lower jackpots and higher jackpots.

Multiple jackpot winner odds increase with every ticket sold, but more likely when the number of tickets sold exceeds the number of possible combinations. The number of possible combinations for Powerball is 292.2 million.

I'm sure there's some slight advantage on commonly picked numbers vs. uncommonly picked numbers or combination of numbers but considering the number of tickets that are quick picked (70-80%) vs. manually selected it's probably negligible.

"Lottery is a tax on stupid people"

Do you agree?

it's hard not to agree, but I don't think that makes people who play the lottery stupid. I've also heard "Lottery is a tax on people who are bad at math." but I think for a lot of people there's something to the hope behind potentially winning a lifechanging amount of money, an itch I think prize linked savings account scratch, too.

I generally only buy one 3 dollar ticket per drawing when the pots are stupid large. Is this about as well as one could play without going nuts on buying tickets?

How do you feel after buying it? Hopeful? If it affords you some escapism and is fun to dream about what you’d do with the winnings I don’t think the occasional ticket is a bad thing

If you feel guilty and like you just threw away money after purchasing then what’s the point?

How rich do you get if you're hit by a meteorite?

Meteorically rich

I was actually discussing this today with my son. Have you ever researched the threshold prize amounts that bring out folks who normally don’t play lotto? It reasons that while the odds of winning don’t change regardless of number of players the chances of splitting the prize increases with more players. At what amount do the ticket buyers come flooding in? 500? 750?

the $1 Billion number is huge for a lot of people but I think it comes down to press and media coverage. The more people hear about it in the news, big winners, etc. then it drives ticket sales for sure.

I thought annuity payments would pay out equal installments over the next 30 years. Example 1B over 30 years is 33M approx each year but from what I've heard that is not the case and the first few years are very small and then increases over time. Can you clarify please?

Also, Texas has a law (HB 59) to remain anonymous for prizes above 1 Million. Do you know if that is only with state lotteries (like Lotto Texas) or can it be with lotteries like PowerBall and Mega Millions that are played across the entire country?

Yeah they typically do increase over time. This is so they can use a bigger headline number but push our the payments into the future, resulting in a lower present value, but higher overall payments.

I am not sure about that anonymous law.

I always thought that if I won the lottery I would start my own lottery. Would this be a good/feasible investment?

You could start a sweepstakes, but private lotteries are illegal in most (all?) states. Probably don't walk a knock on your door from the feds :)

How to win?

You win $2 every time you don't buy a Mega Millions ticket

Would it be easy to take all of the numbers that have been played, the frequency o number of played, and purchase those number?

You certainly could buy the most frequently chosen numbers of the past, say, 3 weeks, but it's completely random so there's no guarantee that would provide you any sort of statistical advantage

Why did powerball go from 1 to $2? Should be obvious I guess, but it kind of erked me. I buy a ticket or 2 occasionally but can't remember the last time, kind of silly thoughts about what I would change being suddenly wealthy. I "won" $150 one time but in reality it was just buying back sunk money. Thanks and I think it is a good discussion to have

I am not fully sure on this one, but they likely just wanted to be able to have "bigger" prizes with a bigger entry fee.

Is studying past drawing, frequency patterns such most , least drawn and lottery wheels worth doing?

Depends on the game. For games of true randomness, no. But there have been loopholes in some games that people have exploited by studying how the game is designed and constructed.

Are the State Lottos (MM & PB) cheating? Are they cheating at the ticket terminals, like choosing numbers for people they don't like, and are they also choosing winning balls too?

nah, the evening drawings are heavily audited and monitored and is unlikely there would be any way to predetermine the outcome.

I completely disagree. They apparently had talked about it in the '80's in order to ensure the money isn't used by any type of criminals, like narco terrorists ect. Or people they disagree with ideologically. And I for one, feel like they are cheating it and showing off about it like they can't be stopped.

Have you watched McMillions the docuseries?