Powerball or Mega Millions Which is better for you?
Powerball and Mega Millions lotteries have recently reached the $1 billion mark. When lottery jackpots reach such high levels, ticket sales soar.
For instance, more than 170 million tickets were sold when the Mega Millions jackpot reached $1.35 billion on January 13. Similarly, on August 4, when the jackpot hit $1.35 billion, Powerball sales went beyond 132 million tickets. Specific drawings attract sales ranging from 6 million to 12 million tickets.
Lotteries put a burden on the poor. Most regular lottery ticket buyers are low-income individuals who cannot afford to lose the money they spend. They see their purchases as a form of entertainment and a chance to dream the impossible dream. However, with thousands of dollars being spent on lottery tickets every year, and about 40 percent of that going to the lottery agency and its stakeholders, this form of entertainment can be quite expensive.
Lotteries are designed to benefit the lottery agencies, not the ticket buyers. The Michigan couple’s success in Michigan and Massachusetts lotteries was due to the scrutiny of the lottery commissions, which looked into how the lottery payout was designed, not just luck.
Unlike Powerball and Mega Millions, which only increase the jackpot when there is no winner, Michigan and Massachusetts lotteries increased payouts for smaller prizes, favoring the lottery players, provided enough tickets were sold to activate the rule. The movie “Jerry and Marj Go Large” humorously and informatively illustrates their story.
When jackpots reach astronomical levels, the biggest winners are the lottery agencies. More ticket sales mean more revenue for them. The publicity they receive is priceless, without any cost.
However, the chances of winning the jackpot are incredibly slim. Even Jerry and Marj Selby, who bought hundreds of thousands of tickets during their lottery journey, never won the jackpot.
So, what are the odds of winning the Powerball and Mega Millions lotteries?
For Powerball, there are 292,201,338 possible combinations, with only one matching the jackpot number. For Mega Millions, there are 302,575,350 possible combinations. Both lotteries will rarely have a winner matching any number drawn from the majority of tickets sold.
As more tickets are sold and the jackpot grows, the payout for smaller prizes or partial matches remains relatively consistent. This flaw was exposed by Jerry Selby when his lottery increased payouts for these smaller prizes, making the expected returns per ticket turn from negative to positive.
This means that hitting the jackpot is highly unlikely, and most winners will come away with partial returns. Since the payouts remain consistent, regardless of the jackpot size, the lottery agencies are the big winners, while lottery ticket buyers, unfortunately, become the deceived ones.
Comparing the two lotteries, a $2 ticket for Mega Millions results in an expected loss of about 25 cents ($1.75), while for Powerball, it’s about 32 cents ($1.68), making Powerball a slightly better game to play, regardless of the jackpot amount. However, neither of them is a sound investment.
If someone were to purchase five Mega Millions tickets for every drawing, they would spend $1,040 in a year and could expect returns of approximately $128. If they did the same over five years, they would be at a net loss of over $4,500.
On the other hand, if they took that money and put it into a savings account with a 4% interest rate, over five years, they would have over $5,600.
If someone followed the same approach with Powerball, they would expect returns of approximately $166 per year, which is slightly better than Mega Millions.
These are the numbers that the lottery agencies hope you don’t know or think about when you buy extra tickets for jackpots exceeding $1 billion.
If the lottery agencies were compassionate, they would increase the smaller prizes’ payouts significantly when jackpots reach astronomical levels, sparing you the expense. But the lottery is a valid gamble, and ‘the house’ should always come out on top, meaning each ticket should expect a negative return. Increasing smaller prizes would offer ticket buyers a slightly better return. Unfortunately, during this period, the lottery agencies are making so much extra revenue that killing their ‘golden goose’ would be foolish and not in their best interest.
If any of you folks out there plan to buy even more tickets for a jackpot exceeding $1 billion, know that the lottery agencies are exploiting your enthusiasm, and you are a willing accomplice, while they are eager deceivers enticing you to do so.