Mar

30

 The MegaMillions Jackpot is now $476 million. The odds of winning the jackpot are about 1:175 million. The odds of breaking even are about 1:74. This is a record jackpot for this game, and close to a record jackpot for any lottery game. The jackpot value is based on an annuity value over about 26 years. The cash value jackpot is "only" about $341 million. Some food for thought:

1) The odds of winning are the same whether the jackpot is $1 million or $1 Trillion. Presumably the odds of sharing the jackpot increase with the size of the jackpot (as more people play), but this is unknowable in advance. Hence at some point, it makes sense for every rational personal to "play" … but what is that point? (I've written about this subject previously.) Is it a jackpot of $500 million or $5 Billion or ???

2) If one structures the purchase inside of a tax exempt foundation, the payout can be tax free.

3) It is unclear to me whether a donation to the US Government (to pay down the deficit) would be tax free, as the Govt isn't a 501c(3) non-profit.

4) At what point does the jackpot stop attracting interest because of the tree-growing-to-the-sky problem? For example, there is some chance that the jackpot could just keep growing and growing and growing. Can the jackpot reach $15 Trillion and be the size of the entire US GDP? Could the Megamillions jackpot become a BLACK HOLE for the economy … sucking all liquidity into it???

5) If you won the jackpot, what would be the first thing that you do? (For me, it's call my Tax Attorney. For other people, it might be to call their Divorce Attorney.)

Just some things to think about …

Leo Jia writes:

People in my city (perhaps across the nation as well) have developed secondary betting systems on lotteries. People buy the official tickets, but instead of waiting for the official win, they bet on the numbers amongst themselves. With those, local groups can have totally separate win/loss chances to themselves. Guess they are tired of the extremely low chance of winning the official lottery. But the secondary systems do make the official lotteries significantly more popular. 


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