I read that the Powerball jackpot now stands at $1.3 billion. Lots of people are buying tickets in the hope of winning. Today, I thought I’d talk about the lottery.
1. If I won the lottery, Take One
What I would do:
- Take the lump sum.
- Set up a trust fund for the kids.
- Buy the American Heritage dictionary. I’ve been putting that off for a few months now.
What I would not do.
- Quit my day job.
- Alter my daily routine.
- Make any big purchases for at least a year. I’d need that time to think more about what I’d want to do with the money.
2. If I won the lottery, Take Two
If I could get away with it, here’s what I’d really do:
- Take the lump sum.
- Set up a trust fund for the kids.
- Go on a nice vacation with the family.
- Buy the American Heritage dictionary.
- Take whatever money was left over to the IRS, and say, “Here is more than $1 billion. Never bother me again1.”
3. How I would get a bigger share of the lottery money
I would buy, say, 100 lottery tickets, and pick the same set of numbers for all hundred. When my numbers came up as the winners, along with, say 10 other people, the winnings would have to be split 110 ways. $1.3 billion divided by 110 winning tickets comes to $11.8 million per ticket. And since I’d have 100 tickets, I’d get about $1.1 billion while the other ten winners would split around $110 million. Clever, right?
4. Why I won’t win the lottery
Sure, the odds are small. But my odds are far, far worse than anyone who plays the lottery. My understanding is that to win, you have to buy a ticket. And since I don’t buy lottery tickets, I have no chance of winning. On the hand, I do have all of the money that I might otherwise have spent on lottery tickets. Come to think of it, I could use that money to finally buy the American Heritage dictionary I’ve been wanting for a few months now.
- I can’t claim credit for this idea. Isaac Asimov once gave this answer when he was asked what he’d do with a billion dollar. I just like the answer ↩
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The thing about lotteries is that people have no real understanding of the odds involved. One mathematician on BBC TV put it like this, with regards to a recent UK lottery. Imagine that you have 14 people sitting in a room, each with a full set of Harry Potter books (all seven of them). Each person then randomly picks a word from a randomly selected page in a randomly selected book. The odds of you winning the lottery are the same as the odds of all 14 people selecting the same word from the same page of the same book.
Lump sum, $100M in trust for family from which draw $250K annuity for living. Balance in a trust for philanthropic endeavors.