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Prob988

New Jersey
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May 17, 2012, 5:25 pm

...roll six times and still climb by the minimum each time?

I would wager that the answer is "never."

Powerball allocates 31.97555% of the sales to the jackpot in the form of the cash prize.

The last cash prize was advertised as $57.4M. It can be shown that the total sales through that jackpot actually generated $52.9M.

The lottery of course, would cover the difference from the profits, but one may question whether this $2 is really a good deal for the states it funds.

Speaking only for myself, I definitely spend much less on $2 tickets than I did on $1 tickets, mostly because the expectation value (the ratio of the prize value to the cost times the odds, adjusted for the poisson distribution of winners) is so much lower for the $2 ticket than the old $1 tickets.

It's good for me in a way, since I'm saving money by not buying lottery tickets.

I think it was a mistake to change ticket prices.
rad242

Bahamas
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May 17, 2012, 5:32 pm

Quote: Originally posted by Prob988 on May 17, 2012
...roll six times and still climb by the minimum each time?

I would wager that the answer is "never."

Powerball allocates 31.97555% of the sales to the jackpot in the form of the cash prize.

The last cash prize was advertised as $57.4M. It can be shown that the total sales through that jackpot actually generated $52.9M.

The lottery of course, would cover the difference from the profits, but one may question whether this $2 is really a good deal for the states it funds.

Speaking only for myself, I definitely spend much less on $2 tickets than I did on $1 tickets, mostly because the expectation value (the ratio of the prize value to the cost times the odds, adjusted for the poisson distribution of winners) is so much lower for the $2 ticket than the old $1 tickets.

It's good for me in a way, since I'm saving money by not buying lottery tickets.

I think it was a mistake to change ticket prices.

This is definitely UNPRECEDENTED! After climbing to 80m in the new game the jackpot should be paying for itself and you would expect it to rollover by 13m to 15m. This is not the case this lap though which says a lot more people are sitting with the legs crossed and wallets closed until it climbs to some obscene level before they play.

"Freedom of Speech? Keep reading and you will discover that freedom comes at a price!"
Editgap

United States
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October 22, 2005
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May 17, 2012, 6:12 pm

Screw PB, match 4 numbers get $200. I have played a year now I haven't matched 3 numbers. At least most people haven't caught on yet. To win anything in this game you have to be that close to winning the jackpot just off by one number. No thanks.
RJOh

100

mid-Ohio
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May 17, 2012, 8:57 pm

Lotteries aren't like casino games and can't be played the same way, buying a ticket only gets you in the game and a chance to win. Once you've brought your ticket, you've made your move and the drawing decides who or if anyone wins.

* you don't need to buy every combination, just the winning ones *
Prob988

New Jersey
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May 17, 2012, 9:48 pm

Lotteries can be played any way one chooses.

Personally I play according to expectation values.

Lotteries most often do not have expectation values that approach casino games, which typically have pretax expectation values of around 0.9. However, for very large jackpots lottery expectation values can actually exceed 1.0.

I never play at Casinos by the way.

The March 27 MM Jackpot, which had an annuity value of $363M actually had a pretax expectation value of 1.10, which was higher than the record setting expectation value of the following $640M annuity jackpot because of the Poisson probability distribution, which favored 3 winners (the number actually obtained). Even so the expectation value was still 0.95, which beats most casinos.

As an aside, the final overall probability of there being one winner in the record jackpot was roughly 9%, and another rollover around 2.5%. The 21% probability of there being 3 winners, which was the largest probability slightly exceeded the probability of there being 4 winners, which was about 19%. The probability of there being 8 winners was slightly less than the probability of yet another rollover, at 2.2%

I typically buy lottery tickets at much lower expectation values, since it's a fun way to pay taxes, but I still choose how many tickets to play based on expectation values. Since the expectation values of the $2 powerball are very, very, very, low, I will probably never play it at the same level as I play Megamillions.

Right now, the best bet where I live is the New Jersey Lotto, which is now at $16.7 Million.
maximumfun

United States
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March 16, 2012
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May 18, 2012, 1:40 am

Quote: Originally posted by Prob988 on May 17, 2012
Lotteries can be played any way one chooses.

Personally I play according to expectation values.

Lotteries most often do not have expectation values that approach casino games, which typically have pretax expectation values of around 0.9. However, for very large jackpots lottery expectation values can actually exceed 1.0.

I never play at Casinos by the way.

The March 27 MM Jackpot, which had an annuity value of $363M actually had a pretax expectation value of 1.10, which was higher than the record setting expectation value of the following $640M annuity jackpot because of the Poisson probability distribution, which favored 3 winners (the number actually obtained). Even so the expectation value was still 0.95, which beats most casinos.

As an aside, the final overall probability of there being one winner in the record jackpot was roughly 9%, and another rollover around 2.5%. The 21% probability of there being 3 winners, which was the largest probability slightly exceeded the probability of there being 4 winners, which was about 19%. The probability of there being 8 winners was slightly less than the probability of yet another rollover, at 2.2%

I typically buy lottery tickets at much lower expectation values, since it's a fun way to pay taxes, but I still choose how many tickets to play based on expectation values. Since the expectation values of the $2 powerball are very, very, very, low, I will probably never play it at the same level as I play Megamillions.

Right now, the best bet where I live is the New Jersey Lotto, which is now at $16.7 Million.

I like the idea of expectation values.
ryanm

Morrison, IL
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May 18, 2012, 10:24 am

Yes, as I've said before, the MUSL should dissolve Powerball and just turn Mega Millions into the old $1 Powerball by having it go to a graduated annuity and increasing the opening jackpot to $20 million with minimum increases of $5 million. Of course, Florida will have to join Mega Millions first.

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Stack47

Kentucky
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February 14, 2006
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May 18, 2012, 11:32 am

Quote: Originally posted by Prob988 on May 17, 2012
Lotteries can be played any way one chooses.

Personally I play according to expectation values.

Lotteries most often do not have expectation values that approach casino games, which typically have pretax expectation values of around 0.9. However, for very large jackpots lottery expectation values can actually exceed 1.0.

I never play at Casinos by the way.

The March 27 MM Jackpot, which had an annuity value of $363M actually had a pretax expectation value of 1.10, which was higher than the record setting expectation value of the following $640M annuity jackpot because of the Poisson probability distribution, which favored 3 winners (the number actually obtained). Even so the expectation value was still 0.95, which beats most casinos.

As an aside, the final overall probability of there being one winner in the record jackpot was roughly 9%, and another rollover around 2.5%. The 21% probability of there being 3 winners, which was the largest probability slightly exceeded the probability of there being 4 winners, which was about 19%. The probability of there being 8 winners was slightly less than the probability of yet another rollover, at 2.2%

I typically buy lottery tickets at much lower expectation values, since it's a fun way to pay taxes, but I still choose how many tickets to play based on expectation values. Since the expectation values of the $2 powerball are very, very, very, low, I will probably never play it at the same level as I play Megamillions.

Right now, the best bet where I live is the New Jersey Lotto, which is now at $16.7 Million.

"The March 27 MM Jackpot, which had an annuity value of $363M actually had a pretax expectation value of 1.10, which was higher than the record setting expectation value of the following $640M annuity jackpot because of the Poisson probability distribution, which favored 3 winners (the number actually obtained). "

The ticket sales were $652 million just for that one drawing and with 3 winning tickets the overall odds of winning the jackpot were 3 in 652 million or 1 in 217 million. And that's much higher than the probability of 1 in 175 million. I understand your point; it was a "must win" jackpot, but in reality players got worst than 175 million to 1 probable odds and approximately 635 million tickets won nothing. The ticket sales in the 19 drawings that created the $363 million cash value jackpot were over $2.35 billion. One out of every 785 million tickets sold won the jackpot.

"Even so the expectation value was still 0.95, which beats most casinos."

There would be no casinos if 39 out of every 40 bets won nothing. Nobody would go to a casino if they had to put $40 into a slot machine with the expectations of cashing for $2. The house edge in Roulette is 5% and if $652 million was wagered on that game, any casino could expect to pay out about $619 million.

"I typically buy lottery tickets at much lower expectation values"

Playing MM, you have to buy 40 tickets before you can expect to cash for at least $2. It takes 844 tickets just to expect to cash a $10 ticket.

While I agree the chances of the jackpot being won are much better when the volume of play exceeds $100 million, the record jackpot and record volume of play proved the odds against any ticket winning the jackpot were actually worse.
KY Floyd

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May 19, 2012, 1:55 am

"I think it was a mistake to change ticket prices."

I think it was a good decision for the bottom line, and that's what it's about. The 5/16 $90 million drawing had sales of $28.536 million. The last comparable pre-increase drawing was for $91 million on 12/17, and that had sales of $28.355 million. That doesn't increase the bottom line by a meaningful amount, but they aren't losing money. Other drawings have had sales that are 10 to 15% higher than comparable pre-increase drawings. Statistically they're about twice as likely as MM to reach any given cash value. Even if every other drawing simply matches pre-increase sales a single extra jackpot in the $300 million range will give them a large windfall that does result in a significant increase in the bottom line.

"The ticket sales were $652 million just for that one drawing and with 3 winning tickets the overall odds of winning the jackpot were 3 in 652 million or 1 in 217 million" "the record jackpot and record volume of play proved the odds against any ticket winning the jackpot were actually worse."

You're confusing the probability of something happening and the reality of what actually happened. Selling more tickets obviously increases the chances that there will be at least one winner. The odds of any given ticket winning are the same whether it's the only ticket sold or 1 of a trillion tickets sold.
ryanm

Morrison, IL
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May 19, 2012, 11:04 am

If you estimate sales of $33 million for tonight's PB draw and the next, the jackpot should FINALLY start paying for itself after tonight's draw, assuming it is not won.

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Stack47

Kentucky
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May 19, 2012, 2:39 pm

Quote: Originally posted by KY Floyd on May 19, 2012
"I think it was a mistake to change ticket prices."

I think it was a good decision for the bottom line, and that's what it's about. The 5/16 $90 million drawing had sales of $28.536 million. The last comparable pre-increase drawing was for $91 million on 12/17, and that had sales of $28.355 million. That doesn't increase the bottom line by a meaningful amount, but they aren't losing money. Other drawings have had sales that are 10 to 15% higher than comparable pre-increase drawings. Statistically they're about twice as likely as MM to reach any given cash value. Even if every other drawing simply matches pre-increase sales a single extra jackpot in the $300 million range will give them a large windfall that does result in a significant increase in the bottom line.

"The ticket sales were $652 million just for that one drawing and with 3 winning tickets the overall odds of winning the jackpot were 3 in 652 million or 1 in 217 million" "the record jackpot and record volume of play proved the odds against any ticket winning the jackpot were actually worse."

You're confusing the probability of something happening and the reality of what actually happened. Selling more tickets obviously increases the chances that there will be at least one winner. The odds of any given ticket winning are the same whether it's the only ticket sold or 1 of a trillion tickets sold.

"You're confusing the probability of something happening and the reality of what actually happened."

In that drawing the probable outcome was very close to the actual outcome, but that doesn't change the fact 3 tickets out of 652 million (1 out of 217 million) won the jackpot and 217 million to 1 are worse odds than 175 million to 1.
KY Floyd

NY
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May 19, 2012, 6:55 pm

Quote: Originally posted by Stack47 on May 19, 2012
"You're confusing the probability of something happening and the reality of what actually happened."

In that drawing the probable outcome was very close to the actual outcome, but that doesn't change the fact 3 tickets out of 652 million (1 out of 217 million) won the jackpot and 217 million to 1 are worse odds than 175 million to 1.

The MM drawing for Tuesday 5/15 sold 19.6 million tickets and produced one winner. Do you really think that if you had bought one ticket you would have had a 1 in 19.6 million chance of winning?
ryanm

Morrison, IL
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May 20, 2012, 12:33 am

Well, I was right and wrong about the PB jackpot finally paying for itself. On the one hand, it STILL increased by only $10 million. In fact, the jackpot amount on draw #8 is lower than the jackpot amount in draw #7 in its previous run! Very pathetic, especially since you would expect it to roll a bit faster now that Mega Millions has had two jackpots won in a relatively short amount of time, keeping its jackpots under $40 million.

On the other hand, the actual sales were ~$36.5 million for the $100 million jackpot (CVO $63.8 million), and total draw sales for the run so far were ~$201.9 million, supporting a cash jackpot of ~$64.5 million. I'm guessing the MUSL is once again stealing from its jackpot fund to pay for its higher than expected payouts for its lower level prizes, not to mention the two jackpots awarded since the price change, which were underfunded.

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DC81

MI
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August 31, 2007
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May 20, 2012, 2:05 am

Quote: Originally posted by ryanm on May 20, 2012
Well, I was right and wrong about the PB jackpot finally paying for itself. On the one hand, it STILL increased by only $10 million. In fact, the jackpot amount on draw #8 is lower than the jackpot amount in draw #7 in its previous run! Very pathetic, especially since you would expect it to roll a bit faster now that Mega Millions has had two jackpots won in a relatively short amount of time, keeping its jackpots under $40 million.

On the other hand, the actual sales were ~$36.5 million for the $100 million jackpot (CVO $63.8 million), and total draw sales for the run so far were ~$201.9 million, supporting a cash jackpot of ~$64.5 million. I'm guessing the MUSL is once again stealing from its jackpot fund to pay for its higher than expected payouts for its lower level prizes, not to mention the two jackpots awarded since the price change, which were underfunded.

Yeah I saw.... Utterly pathetic.

So what's the next gimmick they'll try with Powerball? I'm looking for a third messing with the game within 4 years at this rate as the game keeps getting one upped by Mega Millions. I'm sure the roll overs will pick up but it's clear there's not so much excitement for PB. The only reason it's getting into this range so often (is it getting into the 100M range more often than MM?) is they're selling a lot less tickets thanks to the price increase. I know I usually haven't been buy a ticket unless I'm out of town it it gets to double what my usual minimum for MM is. When's the last time Mega Millions screwed with their matrix again?

All in all though I can't hate PB that much now, I did get a win that was a personal record on a accidentally asked for Powerball ticket which ended up winning $100. Just wish their pay outs weren't so screwy.

You can't predict random.
Prob988

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May 20, 2012, 7:07 am

Yeah. If jackpots keep getting winners in the first 5 or 6 draws, it may prove to be less than profitable for the "bottom line." The lotteries are going to have to cover the jackpots out of profits.

But we'll see. A few giant jackpots might make up for it in their minds.

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