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Dylan Nolte
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If you're alive and reading this, you've heard about the Mega Millions jackpot. If you do not have a ticket yet, congratulations! You have foiled the rest of us.
After no one draws on Friday, a draw on Tuesday night could give a $ 1.6 billion winning ticket holder, or a $ 904 million "cash option", the Mega Millions lottery. .
The New York Police Department tweeted on October 19 that the odds of winning #MegaMillions were "1 in 303 million", which means that a person is "20,000 times more likely to be hit." by lightning … or to be a victim of a crime. "One of the advice of the department to avoid a scam:" if it sounds too good to be true, it is probably the case. "Not always, NYPD!
Everyone knows about the purchase of lottery tickets: lotteries are a tax on the poor, their poverty preventing them from investing in stocks such as stocks and bonds, but who would also like to have money. money to operate, and are somehow very out of the box buying options.
Tickets expire generally worthless. But if you win, do not forget to take the payments, not the cash option, and this may make you happier. But your life will probably be ruined.
All this put aside: hedge fund traders wonder if a ticket has a positive expected value – a way to calculate the market value of an investment or a business. Some say the jackpot draw on Tuesday night is positive. It's good; that means you should buy a ticket.
But according to the EV calculator built by the financial blog "Do not quit your job of the day", this is inaccurate. Their data indicates that Mega Millions is not and has not been a good deal and that beyond a certain amount announced of about $ 450 million, the transaction worsens as the price grows.
"Imagine that," they write.
Traders speculate (somehow jokingly) about the cost of buying each combination of numbers. With 302,575,350 possible combinations, at $ 2 per ticket, it would cost about $ 600 million.
But now, the notes are in human hands across America, with no broker or central clearing house for secondary market transactions. Even if you could find and offer to buy each of these hands, even the least sophisticated non-investor would probably look to the side and charge you at least $ 3. It is America.
Even if you could do it, if the total payment was actually $ 1.6 billion, the return on investment would be interesting. But if you pay taxes and take a lump sum – if you win, pay taxes, but do not take that lump sum! So better not to try.
An earlier version of this article incorrectly referred to the method of evaluation used by some to examine lottery drawings. This is the expected value, not the enterprise value.
Write to Mary Childs at [email protected]
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