Is every ticket value $6? Nah, extra like $1.42.
In case you purchased a $2 ticket for the October 11 Powerball lottery you instantly made your self 58 cents poorer, by my reckoning.
I anticipate the jackpot to be $1.75 billion, barely greater than the official forecast.
The prospect of successful the large prize is 1 in 292 million. However the worth of a ticket is significantly lower than $1.75 billion divided by 292 million, which might come to $6. Three haircuts have to be utilized.
First is that the marketed jackpot is to be pocketed over a interval of 30 years. Take it instantly and also you get solely the discounted current worth. That’s the marketed sum divided by 2.28.
Subsequent is that there’s some probability that, for those who win, you can be sharing the prize with a number of different winners. How a lot this shaves off the anticipated payoff is dependent upon what number of tickets are bought. I’m guessing this quantity can be 129 million for the October 11 drawing, sufficient to remove 19% from the obvious worth.
Final little drawback is your tax invoice. This injury is dependent upon the place you reside. Within the desk beneath I permit a 42% loss to state and federal taxes.
The little prizes, beginning at $1 million and dealing their approach all the way down to $4, are value a collective 19 cents after tax.
Another odds calculation: If my estimate of gross sales is heading in the right direction, there’s roughly a 2-to-1 probability that the jackpot will get no winner on Wednesday and can develop. In that case it’s more likely to high $2 billion in marketed dimension for the October 14 drawing.
There’s a fuller dialogue of odds calculations right here, in a assessment of the same lottery recreation Megamillions.