Unexpectedly Intriguing!
February 21, 2012

Wouldn't it be nice to win the lottery? And since the multi-state Powerball lottery game has just changed to offer higher jackpots, including one that recently went over $330 million, could it be a good idea to buy a Powerball ticket today?

Basic Lottery Game Data
Input Data Values
How many possible numbers are there to choose from in the main set?
How many numbers from this set does the player get to pick?
"Powerball" or "MegaBall" Data
How many possible numbers are there to choose from for the Power or Mega Ball?
How many numbers from this set does the player get to pick?
Ticket Cost Data
Cost of a Lottery Ticket
Income Tax Rates
Federal Income Tax Rate (%)
State Income Tax Rate (%)
Local Income Tax Rate (%)

The Odds of Winning the Lottery and the Magic Jackpot
Calculated Results Values
The Odds of Winning the Jackpot (1 in ...)
The Magic Jackpot (The Number That Makes Playing the Lottery Worth the Cost of a Ticket)

The answer is "it depends". Specifically, it depends upon the following factors:

  • What are the odds of winning the jackpot?
  • How much does a ticket cost?
  • If you do win, how much of your prize will be taxed away from you?

Together, these three things, combined with the kind of math that an economist might do to calculate the environmental costs of a spill from an oil pipeline, will tell us how big the lottery jackpot needs to be to be worth the cost of the ticket to play!

And that's the math our tool today is here to do for you! Just enter the indicated data for the lottery game of your choice, and we'll calculate just how be the jackpot has to get to be worth the amount of money you might be willing to plunk down on a ticket.

Our default data is that for the new Powerball game, which was revised back on 15 January 2012 to double the price of a single ticket from $1 to $2, and which was also tweaked to increase the odds of winning.

Doing the math, we find that in order to fully justify the cost of a $2 lottery ticket, and to also compensate for the negative effect of having the jackpot get taxed at just the current top federal income tax rate of 35%, the Powerball lottery would have to exceed $539,149,262.

Will the Powerball jackpot ever exceed the more than half billion dollars it at least needs to be to be worth the price of its $2 ticket to play? It's possible, but the odds are such that the average jackpot paid out will be around the $175 million level, which means there's probably something else a lot better you can do with your $2 than play the new Powerball game!

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