Saturday Fun: When the Lottery Bet Has a Positive Expected Value
This is one of those very rare times when the lottery bet has a positive mathematical expected value. Expected value is calculated as: (Amount possibly won * probability of winning) minus (Amount of bet * probability of losing). The probability of winning Mega Millions is 1 in 302,575,350. The next jackpot is $904 million (cash value of $1.6 billion annuity). The expected value is ($904,000,000 * 1/302,575,350) minus ($2.00 * .9999999999999999999) = $0.98. This means on average in the long run, for every $2.00 ticket you buy, you would expect to win $2.98 if the jackpot were always $904 million. Of course, you still lose the whole $2.00 every time you lose, which is almost always. Still, on average, over the Read More ›