Legacy Thread

[basserdan]

Mega Millions now at $1.6 billion...

Lottery Tickets and Taxes

By Karl Denninger
2018-10-19 10:03
It's happening again.

The MegaMillions jackpot has reached nearly a billion dollars. Well, sort of.

Of course the real figure isn't the published one, because that's the "25 year annuity" value -- not the cash price. Like virtually everything these days fraud is part of the model and since it's government committing the fraud nobody cares. Neither you or I would get away with claiming $600 million was nearly a billion, but government will -- and does.

Yes, the real cash amount is still a hell of a lot of money -- don't get me wrong.

But the odds of winning are roughly 1 in 300 million, and what's worse is that with taxes out [b[the game just became more-positive on an investment basis in the last few days. Not positive mind you, since the ticket is $2 instead of $1.

Or did it?

No, because the odds of multiple winners go up too and without knowing how many tickets have been sold, which is not disclosed before you buy a ticket you cannot quantify that risk.

In fact the game is designed to never become cash-investment positive as half the money received goes to the states participating and not into the pot; ergo you would have to have an extraordinarily improbable run of no-winners beyond where the cumulative odds of a sold winning ticket are well beyond 1.0 in order for that to happen -- a set of improbabilities that exceed that of you being personally hit by an asteroid in your lifetime.

The Lottery is often called a "stupidity tax" but that's really a misnomer. Instead it's just another example of people selling hope to those who have none.

There are rational people who do occasionally (or even regularly) play with money they can afford to lose. They recognize that the odds suck, they're almost-certain not to win and indeed even when it looks like the money odds are ok they're in fact not and yet they don't care. That's fine.

But for those of less means it's a different story. Many of them play with money they cannot afford to lose and they are suckered into the game by a dream and the lack of full, fair disclosure.

In a rational world we would call this what it is -- fraud -- and jail the people involved.

https://market-ticker.org/akcs-www?post=234392