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Archive for March 6th, 2007

$400 million Lottery Jackpot

Posted by bitguru on March 6, 2007

The estimated jackpot for tonight’s Mega Millions state lottery (California, Georgia, Illinois, Maryland, Massachusetts, Michigan, New Jersey, New York, Ohio, Texas, Virginia, and Washington) drawing is up to almost $400 million.

The lottery has deservedly been called a stupidity tax, but how does this record jackpot change things? The odds of any specific ticket winning are 175.7 million to one. That gives a naive expected value of about $2.25 for each $1 ticket. Not bad, eh? Why not take out a short-term $175.7 million loan, purchase 175.7 million different tickets, and make a nice quick profit of $220 million or so? It’s easy money.

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