Lottery Dream


Always be nice to the people who play Lotto 6/49. You never know.

Although I’m not a frequent lottery player myself, the story is always the same. Like a regular Joe, I put off my will planning, tax filing, oil change, dentist visits, and etcetera. You name it. Yet, whenever I buy lottery tickets, I immediately kick off a fresh spreadsheet in my head planning how much to spend, how much to invest, how much goes to my parents, in-laws, siblings, relatives and friends. That’s right, my friends. You know the jackpot that I didn’t win? I was going to share it with you. How about that poker game, eh?

Not all investments must return tangible dollar figures. The odds of holding a winning ticket is 1 in 13,983,816, or 0.000007%. Why do people keep buying them when the odds are enormously low? Because it’s fun to dream, it creates excitement around the office, and it promotes positive thinking:

Ahhh, I stepped on dog poop! It must be my lucky day. I must buy Lotto 6/49.

Who says money can’t buy you (short-term) happiness? Don’t get me wrong, as I’m not a compulsive gambler. There is a propeller hat on my rationales. I usually wait for the big jackpots with these two theories in mind.

Theory One: Better Odds Without Paying More

Assuming a two-dollar ticket has a 1 in 13,983,816 chance of winning an initial jackpot of, say, $4 millions. If I wait for the jackpot to reach $28 millions, I can pool $14 with 7 friends to buy 7 tickets. Now I have a 7 in 13,983,816 chance of winning the same $4 millions for the same price.

Theory Two: Better Expected Return On The Dollar

7 in 13,983,816 is the same as 1 in 1,997,688. If you divide $28 million by 1,997,688, your expected return on a ticket is $14. Since each ticket costs $2, your expected return on a dollar is $14/2 = $7, or a little less if someone else holds the same numbers as you.

Boy. I’m such a nerd.

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Reader Comments

Comment Number:
1
Written by:
Wolf Stone
Posted on:
May 3, 2007 at 11:07 pm

Finance Guy
From personal experience, i’ve noticed that i seemed to be having an awful lot of “Ahhh, I stepped on dog poop! It must be my lucky day. I must buy Lotto 6/49″ days. So, to remedy this and save some money, i only buy lotto tickets when the prize pool is over $13 million.

Comment Number:
2
Written by:
Noah Vail
Posted on:
May 13, 2007 at 3:19 pm

OLG probably loves people like me because I buy an annual subscription to 649. It’s $208 (less $20 for the coupon code they always seem to put out). The fun factor is the cheque you recieve when you win. The gang at work get a kick out of standing around me and have our picture taken with the $5 cheque. I always promise that it won’t change me and that I’ll keep working regardless of my $5 windfall. 4 wins last year, including a $10 one, kept us laughing.

So the fun at the office, plus the ‘fun to dream’ seem to make it a ‘fun’ investment/gamble.

Comment Number:
3
Written by:
Financial Jungle Guy
Posted on:
May 13, 2007 at 5:25 pm

Hahaha… that’s just hilarious!! Funniest thing I heard for a while. If you don’t mind, I think we’ll try the same in our office next time someone wins something. This is brilliant.