Lotto

[fareastwarriors]

I'm surprised no made a post about it at all. Guess we value a buck ($2 in this case) too much around here.

 

Who bought some Powerball tickets!!?

 

I 2 have tickets for tonight's drawing. Wish me luck!

[fareastwarriors]

Wait, I just  saw 2 posts about powerball tickets from  the "What are you buying today? "  thread .

[LC]

if i win i'm buying all the growth stocks!

[eclecticvalue]

I am buying a public company outright.

[randomep]

 

Has any money manager entity thought about trying to buy every single possible ticket. I believe there are around 200 M combinations, so for $400M you could've won $1.3B at the last drawing cos $1.3B is how much was unclaimed.... and this time you can win even more than $1.3B.

 

 

[jb85]

 

Has any money manager entity thought about trying to buy every single possible ticket. I believe there are around 200 M combinations, so for $400M you could've won $1.3B at the last drawing cos $1.3B is how much was unclaimed.... and this time you can win even more than $1.3B.

 

problem is you have to consider the chances that there will be other winners and you'd have to split the winnings...article below goes into it a bit more

 

http://www.theatlantic.com/business/archive/2016/01/powerball-ticket-all-combinations/423930/

[fareastwarriors]

 

Has any money manager entity thought about trying to buy every single possible ticket. I believe there are around 200 M combinations, so for $400M you could've won $1.3B at the last drawing cos $1.3B is how much was unclaimed.... and this time you can win even more than $1.3B.

 

Reminds me of this story about a group from Australia:

 

http://www.nytimes.com/1992/02/25/us/group-invests-5-million-to-hedge-bets-in-lottery.html?pagewanted=all

[nikhil25]

Once I win the lotto, I'm buying ZINC to find out what the heck is actually going on!

[SmallCap]

Powerball: a progressive tax on ignorance; the more you have, the more you pay.

[randomep]

 

Has any money manager entity thought about trying to buy every single possible ticket. I believe there are around 200 M combinations, so for $400M you could've won $1.3B at the last drawing cos $1.3B is how much was unclaimed.... and this time you can win even more than $1.3B.

 

problem is you have to consider the chances that there will be other winners and you'd have to split the winnings...article below goes into it a bit more

 

http://www.theatlantic.com/business/archive/2016/01/powerball-ticket-all-combinations/423930/

 

 

But I said  that is what you would've won if you played last sat!  Nobody won it and if you had played every combo, the $1.3B which is today unclaimed would have been yours (presumeably).  Yes I am looking at hindsight, but my one sample says it is very unlikely to have a few winners ( by a few I mean say 2 or 3 winners), so tonight is another shot, wanna bet $2 that nobody wins it?

[randomep]

Powerball: a progressive tax on ignorance; the more you have, the more you pay.

 

But the expected winnings of a $2 ticket is now greater than $2 right? It is therefore a rationale thing to play it tonight

[jb85]

 

Has any money manager entity thought about trying to buy every single possible ticket. I believe there are around 200 M combinations, so for $400M you could've won $1.3B at the last drawing cos $1.3B is how much was unclaimed.... and this time you can win even more than $1.3B.

 

problem is you have to consider the chances that there will be other winners and you'd have to split the winnings...article below goes into it a bit more

 

http://www.theatlantic.com/business/archive/2016/01/powerball-ticket-all-combinations/423930/

 

 

But I said  that is what you would've won if you played last sat!  Nobody won it and if you had played every combo, the $1.3B which is today unclaimed would have been yours (presumeably).  Yes I am looking at hindsight, but my one sample says it is very unlikely to have a few winners ( by a few I mean say 2 or 3 winners), so tonight is another shot, wanna bet $2 that nobody wins it?

 

this prob is not perfectly accurate, but this talks about chance of x winners --> https://twitter.com/robleathern/status/686202608529244160

 

and more here about expected value ---> https://twitter.com/robleathern/status/687327823216771072

 

 

[Jurgis]

I've said this on another thread: I buy season tickets for lottery. This is like voluntary tax.  8)

 

IMO, they should give everyone lottery tickets with tax receipts. Would be a great motivation to pay taxes!!!  8)

[BG2008]

Apparently this skateboarder won.  Not sure if this is authentic.  Man, people and their need to broadcast. 

 

https://www.instagram.com/p/BAgWxACSYZC/?taken-by=thisguysthelimit

[TheAiGuy]

Powerball: a progressive tax on ignorance; the more you have, the more you pay.

 

But the expected winnings of a $2 ticket is now greater than $2 right? It is therefore a rationale thing to play it tonight

 

No. Using the Kelly criterion, the optimal bet would have been 1.2 x 10^-8 % of your bankroll on the lottery ticket (without considering splitting). That would have been one $2 ticket if you're worth $17.5 Billion.

[sleepydragon]

I read a hedge fund manager spent 30k and won the jackpot

[TwoCitiesCapital]

Powerball: a progressive tax on ignorance; the more you have, the more you pay.

 

But the expected winnings of a $2 ticket is now greater than $2 right? It is therefore a rationale thing to play it tonight

 

No. Using the Kelly criterion, the optimal bet would have been 1.2 x 10^-8 % of your bankroll on the lottery ticket (without considering splitting). That would have been one $2 ticket if you're worth $17.5 Billion.

 

Lol. The problem with using the statistical expected value of the ticket is that the analysis is almost pointless. Basing your math on probabilities only makes sense if you're going to get enough chances for the probabilities to eventually play out. With the lotto, you're luck if you play a handful of times before there's a winner and the odds reset to something far less favorable.

 

Realistically, the chances in your lifetime of playing with odds like this more than say, 100 times, is probably not very good either..and playing 100 times when your odds are 1 in 282,000,000 still isn't really enough to give the odds time to work in your favor.

[TheAiGuy]

Powerball: a progressive tax on ignorance; the more you have, the more you pay.

 

But the expected winnings of a $2 ticket is now greater than $2 right? It is therefore a rationale thing to play it tonight

 

No. Using the Kelly criterion, the optimal bet would have been 1.2 x 10^-8 % of your bankroll on the lottery ticket (without considering splitting). That would have been one $2 ticket if you're worth $17.5 Billion.

 

Lol. The problem with using the statistical expected value of the ticket is that the analysis is almost pointless. Basing your math on probabilities only makes sense if you're going to get enough chances for the probabilities to eventually play out. With the lotto, you're luck if you play a handful of times before there's a winner and the odds reset to something far less favorable.

 

Realistically, the chances in your lifetime of playing with odds like this more than say, 100 times, is probably not very good either..and playing 100 times when your odds are 1 in 282,000,000 still isn't really enough to give the odds time to work in your favor.

 

It reminds me of the old joke: What's the best way to make money at a casino? Start a casino.

[rkbabang]

I bought a ticket.  $2 for a (very slim) chance to have a large influx in investment capital and spending a few minutes planning on what I would do with it, why not?  It was worth it for the entertainment value alone.  I spend more than that on things that give me less value.

 

I didn't win, btw, in case you were wondering. :)

 

[randomep]

 

 

I didn't win, btw, in case you were wondering. :)

 

No I wasn't wondering, cos I know the odds are like mission impossible :)

 

[rpadebet]

Powerball: a progressive tax on ignorance; the more you have, the more you pay.

 

But the expected winnings of a $2 ticket is now greater than $2 right? It is therefore a rationale thing to play it tonight

 

No. Using the Kelly criterion, the optimal bet would have been 1.2 x 10^-8 % of your bankroll on the lottery ticket (without considering splitting). That would have been one $2 ticket if you're worth $17.5 Billion.

 

I actually read it as....if the pot is worth $17.5 billion then it makes sense to invest the $2. I will wait until the price is right... :)

[TheAiGuy]

Powerball: a progressive tax on ignorance; the more you have, the more you pay.

 

But the expected winnings of a $2 ticket is now greater than $2 right? It is therefore a rationale thing to play it tonight

 

No. Using the Kelly criterion, the optimal bet would have been 1.2 x 10^-8 % of your bankroll on the lottery ticket (without considering splitting). That would have been one $2 ticket if you're worth $17.5 Billion.

 

I actually read it as....if the pot is worth $17.5 billion then it makes sense to invest the $2. I will wait until the price is right... :)

 

Well, that would be the wrong interpretation. If the pot is $17.5 Billion, then it would make sense to buy a $2 ticket if your net worth was $616 Million.

[randomep]

Powerball: a progressive tax on ignorance; the more you have, the more you pay.

 

But the expected winnings of a $2 ticket is now greater than $2 right? It is therefore a rationale thing to play it tonight

 

 

 

 

 

No. Using the Kelly criterion, the optimal bet would have been 1.2 x 10^-8 % of your bankroll on the lottery ticket (without considering splitting). That would have been one $2 ticket if you're worth $17.5 Billion.

 

I actually read it as....if the pot is worth $17.5 billion then it makes sense to invest the $2. I will wait until the price is right... :)

 

Well, that would be the wrong interpretation. If the pot is $17.5 Billion, then it would make sense to buy a $2 ticket if your net worth was $616 Million.

 

 

aah I think your interpretation of kelly's theorem is wrong.

 

Kelly theorem tells you how much to bet on a random binary event where the payout is in your favour. So that answers my question, which is I should play right because the the expected payout is greater than my odds of the payout.  I put the odds of winning at 1:300M and the payout as 1:400M (assuming you share a 1.6B prize with one other person).

 

Kelly's theorem says how much you should play. So given your assumptions whatever they are it is $2 to $17B. And you are saying since I don't have $17B I shouldn't play. But let's suppose for argument sake say I have a more realistic $1.7M then I should play 0.02cents according to kelly's theorem. But common sense says I can either play $2 or zero. You are arguing I should play zero? why? because 0.02cents is closer to zero than it is to $2? Or as the earlier poster implied, you should only play if kelly's theorem gives $2 or greater. But why can't you argue that you play the kelly amount rounded up? In which case it should be $2?

 

Also, Kelly's theorem is based on the log utility function which is an guideline for rational better, but I can argue against log utility function.

 

.... and finally..... you have assumed that the lotto is either the jackpot or nothing, I am pretty sure the other prizes have a non-negligible effect on the odds.....

 

btw I didn't play ostensiablly because the cost of my time to buy it is too great compared to the expected winnings.....

 

 

[TheAiGuy]

Powerball: a progressive tax on ignorance; the more you have, the more you pay.

 

But the expected winnings of a $2 ticket is now greater than $2 right? It is therefore a rationale thing to play it tonight

 

 

 

 

 

No. Using the Kelly criterion, the optimal bet would have been 1.2 x 10^-8 % of your bankroll on the lottery ticket (without considering splitting). That would have been one $2 ticket if you're worth $17.5 Billion.

 

I actually read it as....if the pot is worth $17.5 billion then it makes sense to invest the $2. I will wait until the price is right... :)

 

Well, that would be the wrong interpretation. If the pot is $17.5 Billion, then it would make sense to buy a $2 ticket if your net worth was $616 Million.

 

 

aah I think your interpretation of kelly's theorem is wrong.

 

Kelly theorem tells you how much to bet on a random binary event where the payout is in your favour. So that answers my question, which is I should play right because the the expected payout is greater than my odds of the payout.  I put the odds of winning at 1:300M and the payout as 1:400M (assuming you share a 1.6B prize with one other person).

 

Kelly's theorem says how much you should play. So given your assumptions whatever they are it is $2 to $17B. And you are saying since I don't have $17B I shouldn't play. But let's suppose for argument sake say I have a more realistic $1.7M then I should play 0.02cents according to kelly's theorem. But common sense says I can either play $2 or zero. You are arguing I should play zero? why? because 0.02cents is closer to zero than it is to $2? Or as the earlier poster implied, you should only play if kelly's theorem gives $2 or greater. But why can't you argue that you play the kelly amount rounded up? In which case it should be $2?

 

Also, Kelly's theorem is based on the log utility function which is an guideline for rational better, but I can argue against log utility function.

 

.... and finally..... you have assumed that the lotto is either the jackpot or nothing, I am pretty sure the other prizes have a non-negligible effect on the odds.....

 

btw I didn't play ostensiablly because the cost of my time to buy it is too great compared to the expected winnings.....

 

 

 

Yeah, you don't round up to $2. That would be over betting your edge by a lot, more than 100x, and (formally) the expectation of such a strategy is going broke. The idea is that if you made repeated (i.e. sequential) $2 bets with a $1.7M dollar bankroll with these odds and payouts, you will likely run out of money before you win. That's driven by the variance of the stochastic process, and is true irrespective of the positive expected value of each bet.

 

My math is different than yours as I used different assumptions (35% tax rate, no split pot, no other winners). Those assumptions will definitely change the minimum bankroll size for a $2 ticket to make sense (and the number can vary substantially), but regardless, the minimum bankroll size is in the Billions.

[randomep]

Powerball: a progressive tax on ignorance; the more you have, the more you pay.

 

But the expected winnings of a $2 ticket is now greater than $2 right? It is therefore a rationale thing to play it tonight

 

 

 

 

 

No. Using the Kelly criterion, the optimal bet would have been 1.2 x 10^-8 % of your bankroll on the lottery ticket (without considering splitting). That would have been one $2 ticket if you're worth $17.5 Billion.

 

I actually read it as....if the pot is worth $17.5 billion then it makes sense to invest the $2. I will wait until the price is right... :)

 

Well, that would be the wrong interpretation. If the pot is $17.5 Billion, then it would make sense to buy a $2 ticket if your net worth was $616 Million.

 

 

aah I think your interpretation of kelly's theorem is wrong.

 

Kelly theorem tells you how much to bet on a random binary event where the payout is in your favour. So that answers my question, which is I should play right because the the expected payout is greater than my odds of the payout.  I put the odds of winning at 1:300M and the payout as 1:400M (assuming you share a 1.6B prize with one other person).

 

Kelly's theorem says how much you should play. So given your assumptions whatever they are it is $2 to $17B. And you are saying since I don't have $17B I shouldn't play. But let's suppose for argument sake say I have a more realistic $1.7M then I should play 0.02cents according to kelly's theorem. But common sense says I can either play $2 or zero. You are arguing I should play zero? why? because 0.02cents is closer to zero than it is to $2? Or as the earlier poster implied, you should only play if kelly's theorem gives $2 or greater. But why can't you argue that you play the kelly amount rounded up? In which case it should be $2?

 

Also, Kelly's theorem is based on the log utility function which is an guideline for rational better, but I can argue against log utility function.

 

.... and finally..... you have assumed that the lotto is either the jackpot or nothing, I am pretty sure the other prizes have a non-negligible effect on the odds.....

 

btw I didn't play ostensiablly because the cost of my time to buy it is too great compared to the expected winnings.....

 

 

 

Yeah, you don't round up to $2. That would be over betting your edge by a lot, more than 100x, and (formally) the expectation of such a strategy is going broke. The idea is that if you made repeated (i.e. sequential) $2 bets with a $1.7M dollar bankroll with these odds and payouts, you will likely run out of money before you win. That's driven by the variance of the stochastic process, and is true irrespective of the positive expected value of each bet.

 

My math is different than yours as I used different assumptions (35% tax rate, no split pot, no other winners). Those assumptions will definitely change the minimum bankroll size for a $2 ticket to make sense (and the number can vary substantially), but regardless, the minimum bankroll size is in the Billions.

 

I beg to differ:

 

you said the expectation is that I would go broke before I win if I bet $2? how do you know that? can you point me to a proof? I think ya I gotta look into the original paper by kelly, but I didn't think that's what maximum utility function means

 

the reason I say that is suppose i have a bankroll of $1.7 M, and I have a 9/10 chance of going broke....... but 1/10 chance of winning $1B....... do I play or not? expectation is not necessarily the same as odds of winning or going broke......