Reality Check

Reality Check

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Powerball Pot Soars, But Ticket Not Worth It (Really)

As the Powerball jackpot grows to an estimated $600 million before Saturday night's drawing, Californians are talking about the dream of owning the sole winning ticket

By Sam Brock
|  Monday, May 20, 2013  |  Updated 11:54 AM PDT
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Sam Brock breaks down the odds for winning the largest lottery prize in the history of the country.

Sam Brock breaks down the odds for winning the largest lottery prize in the history of the country.

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The Powerball jackpot keeps climbing. Lottery officials say the big prize now sits at $600 million.

The $600 million prize is the largest in the multi-state game's history, beating out last November's $587.6 million jackpot.

No one won Wednesday's drawing, causing the jackpot to soar.

 

The thought of winning all that money may have you asking yourself: Can you put a price on happiness?

For some people, the idea of hauling in a $600 million jackpot from the lottery would probably come pretty close to fitting the bill.

Yet despite the fact Powerball’s jackpot now sits at $600 million and counting, the mathematical reasoning goes that a $2 ticket for a shot at unthinkable wealth isn’t worth it.

"The breakeven point for an individual person buying a ticket is $287 million,” said Dan Ostrov, a professor of mathematics and computer science at Santa Clara University.

Ostrov used his considerable numerical prowess to calculate the expected return of a lottery ticket.

Specifically, he looked at the possible prize outcomes, and the probability of winning, to come up with the magic number.

For example, if a lotto player had a 1 percent chance of winning $200, the ‘breakeven’ point would be $2.

That’s because you would multiply the 1 percent probability (.01) by the $200 jackpot to get $2. In this case, the Powerball breakeven figure comes out to $287 million.

That’s a sum many people would wrap their arms around, but Ostrov says not when they’re throwing in a couple bucks for nearly impossible odds.

"If you take a deck of 52 cards, and you pull out just five random cards, the chance that you're going to have a royal flush in those first five cards is 270 times more likely than your chance of winning the jackpot at Powerball,” said Ostrov.

He offered a second example, as well. "If you take half the U.S. population, include yourself in that, and then select one person at random, the chance that you will be selected is higher than your chance of winning the jackpot at Powerball."

If a lotto player from California were to win the Powerball exclusively, he or she would collect the $600 million annuitized, or one lump sum of $282 million, according to the Powerball web site.

That’s because the lump sum is taxed at the federal level, though not at the state level in California.

While the present dollar value of $282 million does come close to matching Ostrov’s breaking point, it doesn’t quite get there.

Nonetheless, it’s still hard to imagine just about anyone passing up a chance to win the jackpot for a $2 investment.

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