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Q. It has been reported that the
wealthy don't play
state lotteries unless the jackpot grows enormous, at which
point probability theory says the game may become a good
bet. How good? What's the theory here?
exceed the ticket price, says Williams College economist
Victor Matheson. For example, a recent Powerball jackpot
reached $260 million with odds of winning at roughly 1 in
120 million. So multiply the $260 million by 1/120 million
and you get at least $2 expected winnings for the $1 ticket.
But, but, but... Powerball, Mega Millions and most
others pay out over 20 to 30 years, devaluing the winnings.