Update. I have a more recent post calculating the expected value for the January 13, 2016 Powerball drawing.
Today, a lot of people are buying Powerball tickets for the first time. After all, the estimated jackpot is $550 million!1Cash value is actually “only” $360.2 million. But still — $550 million. That’s more than half a billion dollars!! But is their “investment” a smart bet?
After reviewing the Powerball odds and prizes page, it might seem so. Using the estimated jackpot, the expected value for a $2 ticket is $2.42.
Unfortunately, this calculation ignores the possibility of multiple winners having to split the jackpot.2The probability of multiple winners is not zero, especially when millions of tickets are being bought. You can improve your odds of avoiding duplication by going for the quick pick. These are more random than choosing “personal numbers,” which are likely to be limited to numbers 31 and lower. It also ignores taxes.3The odds of paying taxes on this are virtually 100%. Knowing how to avoid them is above my pay grade.
So buy a ticket if you want an infinitesimal chance at winning.4After all, if you want to get struck by lightning, you should be out standing in a field. But don’t waste your time buying two. After all, although the first ticket increases your odds an infinite percentage from zero, the second ticket merely doubles your odds.
Good luck! You’ll need it…