Megamillions Mania Hits State Governments


States troubled by profligate fiscal policy and an ongoing economic downturn, reports the Associated Press, are looking toward the savior of dreamy suckers everywhere: the lottery! (The cash one, not the get-to-kill-someone one.)

Excerpts from the maw of slavering tax hunger:

People queuing up for Mega Millions tickets aren't the only ones salivating over the record $540 million jackpot that could be won Friday — some state governments struggling through lean times know a hometown winner would bring a tax bonanza.

Taxes on a lump-sum payment option to a single winner could mean tens of millions of dollars of badly needed revenue that could go to restore entire social service programs on the chopping block, pay for hundreds of low-income housing units, forestall new taxes or hire more state troopers…..

States set their own tax rates on lottery winnings. New York, for instance, charges 8.82 percent, while several, including California, charge none.

Mega Millions Logo

Ohio's share of the lump-sum payout would be $23 million, hardly pocket change but still a fraction of the state's $56 billion two-year budget.

"We're not holding our breath waiting for a tax windfall for the state, but we will always root for Ohio and Ohioans and hope lottery luck comes to a Buckeye," said Joe Testa, the state's tax commissioner….

The Rhode Island Association of School Committees has asked the state to use the $17 million for technology and wireless Internet in schools. That would be in place of a $20 million bond.

Gov. Lincoln Chafee has said the state, which is facing a $117 million budget shortfall next fiscal year, can't rely on those lottery winnings — and, of course, no state can. But his director of administration recently weighed in, saying of the tax payment: "We're happy to collect it."

Greg Beato on the lottery and the welfare state from last year.

Reason's state fiscal crises archives.

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  1. What I don't understand is why the federal government doesn't horn in on this action. It don't cost nothing to print ten billion dollars and give them away on a weekly basis.

  2. Jesus Fucking Christ, lottery players are morons.

    1. I would generally agree, unless you happen to be the person who won $500 million dollars.

      1. Yeah, I might blow a dollar on it. Jesus Fucking Christ, I'm a moron.

        1. You'd blow who for a dollar?

          1. Anyone?

            1. How about for $500 million?

              1. Warty? Anyone 500 million times?

                1. For 500 million dollars? I'd even blow Miss Rectal for that.

            2. +1

              Warty is such a whore.

              1. That's been established. The rest is just negotiating the price.

              2. Expected value of the tickets are greater than the purchase price, due to the abnormally high jackpot. Economically speaking, it makes sense to buy as many tickets as possible. Statistically speaking, your odds of winning are slim.

      2. What's the return on the dollar invested? With close to a $400 million lump-sum payout, this might actually be worth a ticket.

        What I would do with nearly half a billion dollars would shake the very foundations of reality.

        1. No, it's not worth the investment. Your chance of winning is so small you might as well go to the casino, throw the dollar on the roulette table, and bet it all on 33. At least there you have a tiny chance.

          Oh, and Warty is fucking stupid.

          1. The house edge in 00 roulette is 5.26% which is not the best or worst you can do in a casino.

            1. I said nothing about roulette being the best or worst you can do. Did you completely miss my point?

              1. Dude, if I win, how would you like to be my doorman for $200K a year? You can bang celebrity guests at will.

                1. Since you aren't going to win, your offer doesn't matter.

                  1. If I did, you're going to be kicking yourself as Warty, my doorman and majordomo, is sleeping with celebrity guests. And eating and drinking very well off of party leavings.

                    1. I call Alison Brie's butthole. Dibs, motherfuckers.

                    2. Sure, whatever. And if there are any legal issues, just pick up an attorney from the pool.

                2. You could even call me Igor for 200k plus celebrity bangs.

              2. I didn't miss it. From what I've read the house odds on this particular lottery are better than your proposed roulette bet.

                1. Expected value of the tickets are greater than the purchase price, due to the abnormally high jackpot from rolling over. Economically speaking, it makes sense to buy as many tickets as possible. For instance, if you had $175 million and could buy all combinations, you'd end up turning a profit.

                  Statistically speaking, the amount any normal individual could spend on lotto tickets would do little to changes the odds from slim.

                  1. You would make a profit ~if~ you were the only one that had the winning numbers. If nineteen other people also picked those numbers, then the pot would be split twenty ways and you'd lose money. The odds that there will be multiple winners depends on how many tickets are sold, so they cannot be determined in advance.

        2. How much does an evil genius base run these days?

          1. You have a bright future, my friend. As a henchman.

            1. I'm available to work as a henchman for $200k/yr.

              1. What? That's prime doorman pay. Henchmen get $100K but are allowed to keep 10% of any pillaging done on the job.

                1. What?! Doorman get twice what Henchman do, plus celebrity buttholes? That's it, I'm forming a union.

                  1. Well, there's raping for henchmen. The doorman has to operate within the law--at least whatever my lawyers can make legal, anyway.

                    And plunder can be very lucrative.

                    Besides, my staff of union-busting attorneys. . .well, I'd advise not unionizing.

                  2. Look how upset you made me. I can't even use plural noun anymore.

            1. Oooh, the hydrofoil yacht--yeah, that's great.

            2. Blocked for security risk: malicious website.


            3. awesome link, thanks!

        3. It turns out that each ticket has a value a bit shy of the one dollar you pay for it.

          Like I said below this is like optimal play blackjack or craps so if there was ever a time to do it its now. I know in my head it's stupid but fuck it.

          1. Okay, get me a ticket.

          2. So you've got about a one in four million chance of winning $250k.

          3. That article is retarded. Tickets don't have a "value", just like a toss of the craps dice doesn't have a "value". And I don't have the time to go over it, but his math is at least full of assumptions and may also be full of shit too.

            People who buy lottery tickets are not being rational. If you want to do it, fine, but it's stupid and you should admit you're being irrational and in effect superstitious.

            1. I already admitted that heh. The Forbes article is probably full of shit but fuck it. All gambling is a losing proposition.

            2. For one fourth the price of a pint I have a chance to win half a billion dollars. I'll fucking take it.

              1. Ha ha, where I live it's more like 1/6 or 1/7 the price of a pint. I hate this place.

            3. His math is fine, his assumptions are reasonable if obviously imperfect, and expected value is a well-established term of art in economics.

              Of course, if you read the whole thing, you find out that the expected value after adjusting for the lump sum deduction (which is effectively the same as a time value of money discount) is somewhere around $0.86, and then obviously you'll pay 39.6% on most of the prizes making up most of that value . . . which means expected value of a ticket is maybe fifty cents.

              So, each ticket you buy is worth around fifty cents . . . and hold at that value until the numbers are called. After the numbers are called, of course, most tickets drop to zero and a tiny handful become worth a lot more.

            4. It's not about the odds. I'm not stupid. I know what the odds are. I'm buying entertainment. I pay a dollar to fantasize about what I'd do with half a billion dollars. The five minutes I spend imagining being that wealthy is worth the buck. Not every decision you make needs to be rational.

              You can't win if you don't play.

        4. The regular weekly lotto is the sucker's bet. But the odds stay the same as the jackpot rises, so the expected value of the ticket goes up while the price stays the same.

          At least that's what would happen if the same number of people played each week. But when the jackpot hits the 300 million mark (or so), the number of people playing goes way up, so your odds of having to share the jackpot also go up.

    2. Jesus Fucking Christ, lottery players are morons.

      I think the lottery was designed to put the mob's numbers racket out of business.

    3. Actually, for this one, the EV is pretty close to 1:1

  3. Feel free to pillory me but I have always bought a cheap cigar and a lottery ticket on my birthday. Having skipped a grade early in life I was always the last to do be allowed to do anything so it felt like a big deal at the time.

    I broke that exception and bought one today because fuck it. Plus forbes says because of the record number of rollovers this drawing will be about an even value proposition like playing optimal blackjack or craps or those 99% return slot machines.

    1. Also if the winner is from Texas no "bonanza" for them, so there's that.

      1. Nvm, didn't see there was special taxes for the lottery. Fuck those assholes.

        1. Nvm again, apparently Texas doesn't have one.

  4. Pillory, schmillory. No one thinks he is going to win. It's simply a nice form of entertainment. There is pleasure for most people in standing around the water cooler talking about what they would do with it if they did hit. The fact that the chances of doing so are about the same whether you buy a ticket or don't doesn't change that.

    I've bought a ticket now and then over the decades - and have hit five of the six winning numbers twice. You wouldn't believe how relatively little you get for doing that incredible thing ($1500 and $10,000 in my cases). But let me tell you, you check that sixth number over and over again about a hundred times.

    1. No one thinks he is going to win.

      ** scratches off ticket **
      ** scratches off ticket **

    2. There is pleasure for most people in standing around the water cooler talking about what they would do with it if they did hit.

      Yeah, a friend of my always says you have a better chance of them accidentally mailing you the check.

      1. Assuming they could accidentally mail the check to anyone in America, you have a better chance of winning the lottery.

        1. Ah, but you're conflating people with households!

          1. Whoa!

          2. Any check would be addressed to one person, not an entire household.

    3. Yep. Still, masturbation is cheaper, takes longer, and is more fun. Buying a few scratch off lottery tickets is about as much fun as jerking off Pat Quinn.

  5. You know what would really be cool? If the jackpot built up to $15 trillion, and the winner magnanimously paid off the National Debt.

    1. If we take the trend of rising jackpots as a polynomial of order 6, we get

      y = 0.0005x6 - 0.0273x5 + 0.5713x4 - 5.7682x3 + 28.912x2 - 56.804x + 47.181

      Where x is the number of lottery draws (starting from January 27, 2012) and y is the jackpot amount.

      If y = 15,000,000,000,000 then x = 567. So if the jackpot isn't claimed 549 times starting today, it would reach that amount. Since there are two draws every week, this would mean that the jackpot would reach $15 trillion 276 weeks from now. That's in July of 2017.

    2. However the probability of this happening is incredibly negligible.

      The probability of no one winning a single draw is approximately e^(-0.0057x) where x is the number of tickets sold for that draw in millions. That probability is currently 0.030. The probability of this occurring 549 times in a row is the product from i = 1 to 549 of e^(-0.0057Xi). This number is effectively 0 even if the number of tickets stays the same (0.030^549 ? 0.000). And we know that Xi will increase with i, since the jackpot is getting bigger with i, so the real probability is much much smaller than 0.030^549.

    3. He wouldn't have to be magnanimous. The taxes would pay off a lot of it.

      1. Yeah, right! Like taxes ever go toward paying off debt. Everyone in America would just get free gold plated hovercrafts or something.

        1. Everyone in America the states that matter politically would just get free gold plated hovercrafts or something.


  6. "We're not holding our breath waiting for a tax windfall for the state, but we will always root for Ohio and Ohioans and hope lottery luck comes to a Buckeye," said Joe Testa, the state's tax commissioner....

    Nope, Chuck Testa.

    1. Of all the memes to dust off, you went with that one?

      1. You probably thought this Buckeye was alive. NOPE!

  7. Behindertsein ist sch?n

  8. people think their chance increases as they buy more tickets, but mathematically speaking, it stays essentially the same. They should run a Facebook Timeline Page of every disappointed face.

    1. Your chance of winning does increase with each additional ticket purchased. But your odds of losing more money goes up faster.

  9. It's the stupid tax.

    1. Definition of gambling: a tax on stupid people.

  10. "The Rhode Island Association of School Committees has asked the state to use the $17 million for technology and wireless Internet in schools. That would be in place of a $20 million bond."

    Wow, so the players aren't the only ones who like to daydream about how they'd spend their winnings.

  11. I never play lotto or scratcher, but I will buy a ticket later today just for the heck of it. Just because something is irrational doesn't mean you shouldn't do it.

    1. Just because something is irrational doesn't mean you shouldn't do it.

      Let me be clear.

      You're a man after my own heart.

      1. Yeah Barry, but the difference is I'm only wasting MY money.

        1. I, I don't understand. What do you mean by your money?

  12. Buy a ticket and pick the numbers 1, 2, 3, 4, 5.

    Same odds.

    1. Hey, those are my numbers!

    2. Well, gee, that's interesting, Meatwad. Those are the same exact numbers in your learn to count numbers book.

    3. Same odds of winning but probably higher expected value because your odds of sharing the jackpot, should those numbers come up, are lower. In fact, if you're going to play at all (I never do) you should try to play numbers like these that are unlikely for anyone else to pick. Any consecutive string would probably work.

      1. Except other people think that way so they are not unlikely for anyone else to pick. Maybe a Fibonacci sequence or last weeks numbers.

      2. One of my intro to statistics texts mentioned that 1, 2, 3, 4, 5, 6 was one of the more popular sequences, with at least 15 to 20 of those chosen each draw. I think they were citing some guy from one of the state lotteries, and this was at least 15 years ago.

        Me, I pick high primes, 43, 47, that sort of thing.

        Slate took a look at the odds too, with the following short article on how to calculate the likelihood that the prize would be shared.

      3. I've read that you should pick the higher numbers because many many people put in birthdays, which are all combinations of 1-12 and 1-31, therefore numbers above 31 are less likely to be shared.

  13. I just bought some gas at a Chevron station in CA. The clerk told me that I that the CA lottery was up to 1/2 a million. I said, no, it's up to half a billion. He smiled and told the customer behind me that it was it was to 1/2 a million.

    Numbers, how to they work?

    1. If it was your accountant I'd be a bit more worried about it.

    2. I had a patient in clinic tell me today that the Mega was at least $500 .. I said, "Yeah at least 500 dollars."

      She didn't catch it.

  14. The lottery is just a special voluntary tax on people who are poor at mathematics.

    1. Do you know what expected valus means?

      1. *value

        And taxes are coercive, so you're wrong twice in one sentence!

      2. The actual expected value of tickets in this drawing, after taxes and probability of shared jackpots and time value of money discounts, is about fifty cents.

        However, a bunch of people who are bad at math are doing "jackpot number versus odds" calculations and buying tickets.

  15. I buy a single ticket on the really big lottery jackpots. It is a good excuse to spend 20 minutes perusing the used yacht ads. I'll check the 100'+ ones before this drawing.

  16. I wonder if I could apply for a $180 million loan at the bank...

  17. I only play the lottery if it is over $300 million.

  18. In capitalist America, lottery plays you!

  19. Hating Lottery Winners
    10/10/2010 - Graham Templeton {edited}
    === ===
    The government should not play on the mathematical illiteracy of its population.

    The government runs massive ad campaigns to convince you to throw your money away on the lottery. But it won't let you start a casino because gambling is bad for the community. Lottery rackets have been highly illegal, and they still are, unless you're the government.

    The government restricts our freedom, moralizing at us, and empowering itself to make our financial decisions for us. But, it plays commercials for its own brand of cocaine, while telling us to "Just Say No" to other brands.
    === ===

  20. Welcome to America, Run by the rich, FOR the rich!

    1. It is so good that more socialist countries like Brazil and France do not have lotteries to oppress their populations. (sarc)

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