What To Read About The $1.6 Billion Mega Millions Jackpot
Update: One extremely lucky person has won the entire jackpot. The ticket was sold in South Carolina, which means the identity of the winner may never be revealed:
South Carolina, however, is one of several states that does not require lottery winners to publicly reveal their identities. The winner or winners can quietly claim the annuity, or more likely the cash option of $877.8 million, and disappear.
Previously: The next drawing for Mega Millions, a lottery that is available in 44 states plus the District of Columbia and the US Virgin islands, will be held tonight at 11 pm EDT. The jackpot has grown to a record-high $1.6 billion. (That's the estimated total payout if the winner takes the annuity option, which is distributed over 30 years; the lump-sum option is closer to a measly $913 million.) The deadline for buying tickets, which varies by state, is approaching.
Should you buy a ticket? Should you buy as many tickets as possible? And what should you do if you win? Here's what to read about the lottery as you daydream about what you'll do with your winnings.
The Odds Aren't In Your Favor, But The Expected Payout Is
The odds of winning the Mega Millions jackpot are minuscule — 1 in 302 million. "Another way of looking at that is that a single ticket has a 99.99999967% chance of losing the jackpot," writes Business Insider's Andy Kiersz. That means the median value of a $2 Mega Millions ticket is $0. But the expected value of a ticket — a calculation that statisticians often use to determine whether something is a "good bet" in the long run — is higher than its face value, as Slate's Molly Olmstead explains.
The value of a ticket, as laid out by Jordan Ellenberg, can be found by multiplying the probability of getting a certain prize by the value of the prize itself, repeating for all potential prizes, and then adding your results. If we consider just the jackpot, we multiply the incredibly large prize ($1.6 billion) by the incredibly small odds of winning (1 in 302 million) and get an expected value of $5.29 — definitely a lot more than the $2 cost of a ticket…
And even when you factor in federal taxes at the highest tax bracket of 37 percent, which you'll have to pay if you hit the jackpot, and state taxes at the highest level, you won't come close to dipping down to that $2 mark. With the highest federal tax rate and an 8 percent state tax, your ticket is still worth $3.23.
[Slate]
Buying Every Single Ticket Combination Would Hypothetically Be A Good Investment
Another way to look at the value of a Mega Millions ticket is to point out that if you bought every single number combination — which would cost you a total of $605,150,700 — you would hypothetically come out ahead. Emphasis on "hypothetically" — as Business Insider's Kiersz points out, the possibility of splitting the jackpot with another winner, and of other people trying the same thing, would make this a losing gambit. And then there's the sheer difficulty of filling out 302 million tickets to make sure you covered every single possible number combination:
According to Statista, Wells Fargo has about 232,321 employees. At about 1,302 possible Mega Millions tickets for each employee, it would take each employee just over 10 hours a day for three days buying and filling out tickets at a pace of 43 tickets an hour.
So while this would be extremely difficult to do and perhaps not the best use of a large organization's resources, it seems as if it may be physically possible, if somewhat grueling, to actually buy every Mega Millions ticket.
Exercise Extreme Caution About Going In On Lottery Pools With Friends, Family Or Coworkers
You might be tempted to go in on a pool with friends or coworkers in order to buy more tickets than you'd be able to afford on your own and split the proceeds if you win. However, such arrangements can ruin your relationships and inspire lawsuits if they aren't carefully handled, as lawyer Rubin Sinins told NBC News based on his own professional experience:
"You have to be crystal clear about who is part of the pool and document for everyone involved who is part of the pool," said Sinins, who represented five New Jersey construction workers back in 2009 over a $38.5 million lottery pool dispute.
The construction workers said a former co-worker was lying when he claimed sole ownership of the ticket. A state court ended up resolving the dispute in 2012 after making Americo Lopes, the defendant in the case, give each of the participating workers $4 million out of the $24 million cash option.
[NBC News]
If You Win, Keep It On The Down Low Until You've Talked To A Good Lawyer
Look, you are almost certainly not going to win. But if you do, the New York Times' Neil Irwin has some advice, based on interviews with people who have worked with lottery winners. In general, they say, you should store the ticket someplace very secure and tell no one you've won until you've hired a team of professionals to help you manage your sudden influx of wealth.
Your lawyer can help line up tax accounting and wealth management services, or you might wish to bring in contacts with those specialties on your own.
"You need a team in place with experienced members who are used to dealing with tens or hundreds of millions of dollars," said Andrew Stoltmann, a Chicago-based lawyer who has represented lottery winners who became victims of various investment swindles.
Mega Millions Recently Tweaked Its Formula To Make Massive Jackpots More Likely
The current Mega Millions jackpot sets an all-time record, but it's also the result of a canny change in the game's formula last October. The tweak was designed to make it easier to win smaller prizes but harder to win the jackpot — thereby leading to ever-higher jackpots when no one takes home the big prize.
Here's how Mega Millions used to work: Players picked five numbers from 1 to 75 and a Mega number from 1 to 15. The odds of winning the top prize were 1 in 258,890,850.
Since Mega Millions modified the formula, players now pick five numbers from 1 to 70 and a Mega number of 1 to 25. The odds of winning the jackpot are now 1 in 302,575,350.
Lottery officials estimate that 75% of all the possible number combinations will be sold by tonight's drawing — which means that there's a 25% chance there won't be a winner, in which case the jackpot would edge toward $2 billion for the subsequent drawing.
Ignore Bad Advice
The Week's Jeva Lange has an amusing roundup of some of the worst advice that has been published about buying lottery tickets, which is… really something:
1. "Buy as many tickets as you can afford." [Fox News]
Do not do this.
2. "If you find a discarded lottery ticket, it's worth taking the time to double-check [if it's a winner]." [The Balance Everyday]
It won't be.
3. "Win a bigger payout by choosing rarer numbers." [The Balance Everyday]
This is not how statistics works.
[The Week]
