The Powerball Odds Could Be In Your Favor

My two bucks: Normally, lottery odds are set heavily against the player and in favor of the house.  This time around it’s a a playing out a little differently with a staggering $1.5 billion Powerball drawing. What are the odds?

Powerball Odds Lottery

Powerball Odds for the biggest lottery drawing in history.

The Biggest Jackpot in History

This is the biggest jackpot in lottery history. The next closest cash prize ever awarded was $656 million Mega Millions ticket. That’s less than half of the $1.5 billion purse set for tomorrow’s drawing. Which even if taxed at 39.4% to 39.6%, leaves you with $900 million nest egg. Not bad, so what are the odds of winning? As you would expect and as Durango Bill’s Applied Mathematics on powerball odds explains, this is the product of the number of ways your numbers match up to the balls:

The numbers picked for the prizes consist of 5 white balls picked at random from a drum that holds 69 balls numbered from 1 to 69. The Powerball number is a single ball that is picked from a second drum that has 26 numbers ranging from 1 to 26. If the results of these random number selections match one of the winning combinations on your lottery ticket, then you win something.

The Multi-State Lottery Association Powerball website explains that in fact the odds are quantified by using combinations:

Some persons who enjoy statistics (they do really exist) will come up with odds of 1 in 17 billion for the jackpot prize. Remember that you don’t need to match the numbers in exact order – we use combinations to determine the probabilities for the first five white balls and not permutations

Powerball Lottery Break Even Point

All boiling down to Financing, and Combinations Calculator (nCr). First, let’s presume that we agree to forgo the annuity option and stick with the $930 million cash prize. Now, we can look to the oddds in  order to figure out our risk. Each Powerball ticket has one chance in 292,201,338 in winning. This is something that we could all verify and agree with. That’s over 292 million possible ticket combinations. Each Powerball ticket has a total cost $2. That brings us to an initial investment of $584 million.  Leaving us with $346 million in total winnings.  We’ll also have to account for any state and federal taxes that come with any winning lottery ticket. The federal tax is at 25%, or $232.5 million. Here in Illinois, the state tax for lottery winnings is 3.75%, in this case $34.9 million. That leaves us with $78.6 million. Still, not bad.

$584 Milllion of Risk

But wait, there is more. What if someone else wins? After all,  it is a lottery, and more than one person can win.  Unfortunately, if there was even only other winning ticket, we would be splitting the jackpot. That wouldn’t be enough to substantiate the investment. In fact, it could leave us with a $253 million dollar debt. Presuming marginal differences in the state tax, we’re looking at roughly $660 million in winnings after federal and state taxes. Those winnings would then have to be split by the ticket holders, if there are two winners, then divide by two, if three people win, then divide by three and so on. In this case we are splitting $660 million by two, leaving us with $330 million in total winnings. Sadly, our total ticket costs are still $584 million, leaving us debit of $253 million.

Thank you everyone, Mia.

Today’s Gold and Silver Prices are Probably a Better Bet

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