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# MM annuity equivalent in PB: \$93M.

Topic closed. 13 replies. Last post 11 years ago by CASH Only.

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New Jersey
United States
Member #21206
September 4, 2005
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 Posted: December 27, 2005, 9:55 am - IP Logged

The current cash value of the MM jackpot is \$44.9M.  The advertised annuity jackpot is \$77M meaning the cash/annuity ratio is 0.599.

The current cash prize in powerball is \$14.6M which is advertised as \$30M annuity, meaning the cash/annuity ration is 0.489

This means that a cash value prize (which represents the true value of a lottery prize)  equivalent to the current MM jackpot prize would be represented as a \$93M jackpot.

The entire annuity business (as well as ever lengthening odds) is misleading, of course, but most people are aware of it.  Still, many people, myself included, use the advertised jackpot as a shorthand.    I don't doubt that MM will aspire to be as misleading as PB in the future, but it is always a good idea to keep in mind that the real prize of the two lotteries are very different.  In fact, the recent \$340M  advertised jackpot for PB was actually smaller than the recent \$315M MM jackpot.

When I decide how many tickets to buy, or whether to buy tickets at all, I look at the expectation value, which is a function of the size of the prizes that are possible to win (cash pretax value) divided by the odds of winning.    Expectation values for the two lotteries right now are 0.43 for MM, and 0.32 for powerball.  Powerball does somewhat better in expectation value since the odds against winning are lower.  Still, neither lottery gives an expectation value close to 1.00 until they are near record size.  An expectation value of 1.00 or greater (which has only happened a few times, even at pretax cash value) is when a game is considered a "good bet."

Like most lottery players, I don't insist on a "good bet."  The better the bet is however, the more likely I am to play.

mid-Ohio
United States
Member #9
March 24, 2001
19821 Posts
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 Posted: December 27, 2005, 4:25 pm - IP Logged

Maybe MegaMillions should advertise their jackpot same as some discount stores advertise their merchandise with a comparable price.

MegaMillions jackpot = \$75M Annuity - \$45 Cash - Compare to PB \$93M jackpot.

might not work for PowerBall

PowerBall jackpot = \$75M Annuity - \$37M Cash - Compare to MM \$66M jackpot.

* you don't need to buy more tickets, just buy a winning ticket *

New Jersey
United States
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September 4, 2005
949 Posts
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 Posted: December 27, 2005, 5:02 pm - IP Logged

Maybe MegaMillions should advertise their jackpot same as some discount stores advertise their merchandise with a comparable price.

MegaMillions jackpot = \$75M Annuity - \$45 Cash - Compare to PB \$93M jackpot.

might not work for PowerBall

PowerBall jackpot = \$75M Annuity - \$37M Cash - Compare to MM \$66M jackpot.

I suspect that what MM will do is simply to mimic Powerball by adjusting the annuity to make it look bigger.  That's too bad in my opinion.

Many lotteries have approached their advertising by inflating annuities, including NJ Pick-6.  In fact, you cannot even find out what NJ's cash value is - they don't advertise it or even release it.  They stopped telling the cash value when they started inflating the annuity.

Personally this makes me reluctant to buy NJ Pick-6 tickets.  Other people seem to agree:  The NJ Pick 6 by is a weak lottery.  It takes 10 or 20 rollovers to even reach "\$10 million" which is in reality only 3 to 4 milion.

This need not be so.  New Jersey is typically the third largest seller of MM tickets after New York and California.  Both California and New York have managed to support viable independent lotteries.   I cannot speak for other New Jersey players but I find the obscured NJ game to not generally be worth playing because I don't have a realistic sense of what the prize actually is.

mid-Ohio
United States
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March 24, 2001
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 Posted: December 27, 2005, 10:13 pm - IP Logged

Ohio has a new game Lot'O Play which replaced their 6/49 game and its cash value is 50% of its jackpot value, same as SLP was.  It's a 5/100 game that is on a bingo style board with supposedly 12 chances to win when actually it's 12 chances to win once which is not the same. It's basically a QP game since only one of the 12 possible combinations can be picked by the player.  It's also designed to sound like a better game than it is, but I think once players notice the jackpot seldom is won and the roll overs are very small they will wise up.

* you don't need to buy more tickets, just buy a winning ticket *

United States
Member #379
June 5, 2002
11296 Posts
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 Posted: December 28, 2005, 9:44 am - IP Logged

Maybe MegaMillions should advertise their jackpot same as some discount stores advertise their merchandise with a comparable price.

MegaMillions jackpot = \$75M Annuity - \$45 Cash - Compare to PB \$93M jackpot.

might not work for PowerBall

PowerBall jackpot = \$75M Annuity - \$37M Cash - Compare to MM \$66M jackpot.

I suspect that what MM will do is simply to mimic Powerball by adjusting the annuity to make it look bigger.  That's too bad in my opinion.

Many lotteries have approached their advertising by inflating annuities, including NJ Pick-6.  In fact, you cannot even find out what NJ's cash value is - they don't advertise it or even release it.  They stopped telling the cash value when they started inflating the annuity.

Personally this makes me reluctant to buy NJ Pick-6 tickets.  Other people seem to agree:  The NJ Pick 6 by is a weak lottery.  It takes 10 or 20 rollovers to even reach "\$10 million" which is in reality only 3 to 4 milion.

This need not be so.  New Jersey is typically the third largest seller of MM tickets after New York and California.  Both California and New York have managed to support viable independent lotteries.   I cannot speak for other New Jersey players but I find the obscured NJ game to not generally be worth playing because I don't have a realistic sense of what the prize actually is.

You think Pick-6 Lotto is a bad game? NY Lotto pays out only 38%-40% of sales as prizes.

mid-Ohio
United States
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March 24, 2001
19821 Posts
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 Posted: December 28, 2005, 11:54 am - IP Logged

Cash,
There's nothing wrong with NY paying 38%-40% of sales as prizes along as they pay the prizes amounts they have posted.  If you don't like the prize amounts don't play the game.

* you don't need to buy more tickets, just buy a winning ticket *

Wandering Aimlessly
United States
Member #25360
November 5, 2005
4461 Posts
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 Posted: December 28, 2005, 12:30 pm - IP Logged

Hmm. Does this mean that FL has a pretty good payout or they are underestimating the actual ticket sales? I'm mentioning this because I often see cash values as high as 60% of the advertised jackpot to winners for the Lotto and 70% for the FL MegaMoney which has jackpots ranging from \$500K to \$2M (maximum)  From my calculations the average is around 56% for the 6/53 Lotto and 67% for FL MegaMoney which is 4/44 & 1/22 for the Megaball.  I could be missing something, but I've never seen anything stating the cash value of a jackpot until the winner claims his prize. Then I just do the math. Last week when a player won \$46M the press release only said she took 30 installments, but didn't mention the cash value had she chosen a lump sum. I've never seen a lump sum payout less than 50% however. For example on 11/22 a ticket was for a \$9M jackpot was claimed and the winner got a lump sum in the amount of \$5,223,294.77 which is over 58%.  (I doubt if the guy cared about the 77 cents!)

BTW, the reason I always type "FL Mega" is so people reading my posts won't confuse the game with MM since we don't have any multi-state games here.

New Jersey
United States
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September 4, 2005
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 Posted: December 28, 2005, 1:19 pm - IP Logged

Lump sums vary with the structure of the annuity.  Lotteries can manipulate the apparent size of the jackpot by manipulating the annuity.  Annuities that are back loaded (pay the most money when they are mature) look even bigger than even payout annuities.  This is what powerball recently did.

Early lotteries had a twenty year payout and there was no cash option.  Modern lotteries now typically have a 30 year payout and all sorts of annuity structures.

It is always worthwhile in my opinion to only consider the cash value, whether or not one intends to take the cash or the annuity.  This is the real value of the lottery.

I suspect that in the long term, hyper inflation will almost certainly occur since basically the government prints money with no regard to paying off the debt, so I have no intention of  taking an annuity should I win, but many may disagree with me.

Morrison, IL
United States
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May 13, 2004
1884 Posts
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 Posted: December 28, 2005, 7:04 pm - IP Logged

If hyperinflation occurs, not even the cash option jackpot will save you, because it's likely the money system will break down and the economy will go back to a barter system (if things keep getting more expensive moneywise, people will demand real output for real output).

New Jersey
United States
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September 4, 2005
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 Posted: December 28, 2005, 7:29 pm - IP Logged

If hyperinflation occurs, not even the cash option jackpot will save you, because it's likely the money system will break down and the economy will go back to a barter system (if things keep getting more expensive moneywise, people will demand real output for real output).

This is not generally the case.  When Argentina experienced hyperinflation in the 1980's from policies rather like those of our present government, excessive spending for non-productive purposes and to service massive gov't corruption, people who held overseas investments did OK.  In fact, they were able to live extremely well in Argentina because they had access to foreign exchange.   I note that before the 1980's, Argentina was considered financially unassailable.

If I won the lottery I would invest a considerable amount in international securities.  I would only keep a small amount in the United States.

Morrison, IL
United States
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May 13, 2004
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 Posted: December 28, 2005, 7:55 pm - IP Logged

Where is this financially stable country you'll invest in? If the US cannot be counted on to be stable, nobody can.

New Jersey
United States
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September 4, 2005
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 Posted: December 29, 2005, 10:33 am - IP Logged

Where is this financially stable country you'll invest in? If the US cannot be counted on to be stable, nobody can.

I would diversify quite a bit with respect to countries.  New Zealand, Japan, Australia (huge uranium reserves) Sweden, Norway, France, and Canada would probably top my list.  I would also consider certain industries in India.  All of these countries will experience pain with the collapse of the US economy, but I expect that a person who is wealthy because of his holdings in these nations will still be wealthy.

Many major nations have declined after being the "most stable."  Early last century Britain declined and was replaced by the United States.  By 1945, the British economy was basically a basket case - just 30 years after it had been the most powerful financial force on earth.

The United States is the world's largest debtor.  It has doubled its debt in just the last 5 years - a debt that was already the largest in the world.    The country shows no signs whatsoever of embracing fiscal responsibility.  We are spending money like drunken sailors and what's more, little of that spending is in an improved infrastructure.   The United States hasn't had a positive trade balance in many years.  The economic collapse of this country should be obvious - and after it happens everyone will opine solemnly how we should have all seen what was coming.  In the next several years many of the oil producing countries will stop using US dollars as its base currency.  We cannot afford to attack all of them as we attacked Iraq when it proposed doing exactly that.  (Iran is setting up its own oil exchange now.)

BILOXI, MISSISSIPPI
United States
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August 3, 2005
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 Posted: December 29, 2005, 10:41 am - IP Logged

oh  so right  also look at india and china  for new drugs

United States
Member #379
June 5, 2002
11296 Posts
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 Posted: December 29, 2005, 3:55 pm - IP Logged

Shame on the woman who chose the 30 annual payments! I'm not wishing her a happy new year!

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