Are you a gambler? Maybe you have a weekly or monthly lottery budget?
You probably already know this, but you might as well be throwing that money away. The current odds of winning the jackpot in Powerball are about 1 in 292 million or so. Those odds of taking home the whole jackpot get even worse based on how many people are playing the game, since there is a greater chance of splitting the pot.
With odds of winning a jackpot at 1:292,000,000 why do we even bother?
Compulsory gamblers receive tons of dopamine from the thrill of the gamble, whether they lose or not. Losses for compulsory gamblers kill the high and encourage more gambling. Just like any addiction, it can become a dangerous cycle that we become wholly dependent on… and all because of these crazy chemicals in our brains.
The same can be said of the lottery, and it’s the way a lot of us create justification for throwing money away. The thrill of the game, however short-lived, is worth it to a lot of us. Some people can justify a lot more for this thrill, but the truth is, the increased odds you get from buying multiple tickets are so statistically insignificant that they can’t be mathematically justified in my opinion.
Have realistic expectations but don’t be afraid to dream
I think playing games like the lottery with realistic expectations of loss can be a healthy habit. The dream of winning big releases a lot of feel good chemicals, and as long as we are already very prepared for the loss, the actual loss does not bring much of a crash. In this way, I think the lottery can actually be money well-spent.
My wife and I like to talk about all the things we’d do with the money and how we’d prioritize our expenses, make it last, and not be stupid with it like so many others. It also puts our current expenses into perspective a little bit, and is an easy way to get our focus back on saving, investing and living frugally.
We’re already debt free, so a lot of the things we would spend our lottery winnings on are very similar to what we already spend our monthly expenses on, so it’s a fun exercise.
What about scratchers?
When it comes to scratchers, your odds of winning are considerably higher (usually around 1 in 4 scratchers wins something) but the thrill is not as great, and neither is the jackpot. Although some people have made lucrative profits off of scratchers, I don’t personally feel the same rush when I buy a scratcher ticket as I do when I buy a Powerball one.
Since the jackpot isn’t as high, the dream doesn’t feel as big.
With extra small cash windfalls, I don’t suggest buying scratchers if you get the lottery itch.
When does it make mathematical sense to play Powerball?
According to this article and some simple math equations, the time it makes mathematical sense to play Powerball is when the intrinsic value of your ticket is worth what you paid for it. With such low odds to begin with, the jackpot has to disgustingly high in order to increase the value of your physical ticket to $2.00.
There’s not a solid answer for this, because the higher the jackpot goes, the more people play, which increases the odds that you’ll have to split the jackpot.
But the rough estimate is somewhere around a $2 billion jackpot. It’s actually considerably higher when you account for additional players and tickets sold.
When does it make emotional sense to play Powerball?
Your odds of winning the jackpot (not accounting for the possibility of a split) stay the same no matter what. So really what you need to do is put a price on how big that jackpot would need to be for you to be a happy dreamer.
For us we created an arbitrary limit at which point we decided the dream of winning big was worth $2 a week or so. This isn’t enough to break the bank, and comes out to less than $100 a year, assuming we play every week (which we don’t).
Sometimes it hurts to be too analytical, and it’s easy to think of the better things we could spend that $100 on. It’s enough to pay our water bill each month. Or 2 months of our internet service. And so on. But our water bill is going to get paid regardless, and the internet doesn’t always provide the same ability to dream.
For us, our jackpot limit is $300 million. Any time we see it go over $300 million, we decide to buy. With how quickly that’s been happening lately, we might increase it to $400 million in the future. $300 million would be about $180-$200 million cash payout. That’s plenty to dream with.
Other than that, it always makes emotional sense to play if you feel like you are getting your money’s worth out of the dream. Just don’t ever play with the expectation of winning, or you are much more likely to spend more than you should.
What are your thoughts on the lottery? Have you had success with scratchers?