Wednesday, August 29, 2007

Because a co-worker wants me to buy into their Lotto pool, it got me thinking...

That the likelihood of winning being so small, I am better off burning my money with a match, or giving it to charity. As you know, the state Lottery is a voluntary tax (and I give enough to taxes, thank you very much). In short, there are two golden rules, say those who work for state lottery commissions: Play only if you can afford it, and play only for fun. "If you're playing because you think you're gonna get rich, then don't play," says Don Feeney, research director for the Minnesota State Lottery. Unfortunately, one third of the people in the US think winning the lottery is the only way to become financially secure in life as confirmed in a recent random survey.

If you can safely afford to drop a sawbuck or two on the lottery, then know the odds. Many people are surprised to learn that the odds in the big lotteries don't change when the number of ticket-buyers surges. Your odds of winning huge in the Powerball are 1 in 120,526,770 no matter how many people play. Likewise, the Mega Millions odds remain 1 in 135,145,920. The lesson: If you're going to throw away $5 on lottery tickets, you might want to wait until the jackpot climbs to $200 million from $10 million (although either win would be nice). One downside: A bigger jackpot means more people playing and a higher probability of having to share the prize. Sure every dollar you spend increases your chances of winning, but each increase is minor. Spending $2 increases your chances from 135 million:1 to 68 million:1. Yeah you doubled your chances, but as we learned in elementary 2 times 0 is 0, so it follows that 2 times almost 0 is also almost 0. Still, statistically, you have better chances of getting into a car accident, plane accident, or struck my lightning, than to win the lottery.

Here is a better way to play the lottery, write down 5 numbers between 1 and 49, then pick a Powerball number between 1 and 42 (you can reuse any of the previous 5 or pick another number). Don't buy a ticket, then when the drawing is held, and your numbers don't match, you can congratulate yourself for saving a dollar.