Yes, sometimes you should play the lottery. Why?
Well, if anyone out there has watched poker on TV, or ever played with anyone who is fairly serious, you will be familiar with the term “pot odds.”
Basically, pot odds states that the amount of money in the pot is sufficient enough to justify calling the bet. In this case, the bet would be the $1 lottery ticket, and the pot would be the jackpot.
The $390 million Mega Millions jackpot from the March 6, 2007 drawing is one example of a time when a $1 bet is a good bet. Your odds of actually winning the main jackpot are one in 175,711,536. Based on the odds, if you purchase 175,711,536 different tickets, you will win the jackpot 1 time. You could also win many other smaller prizes ranging from $1-250,000. And every losing ticket would count as a gambling loss for tax purposes. Of course, you would also have to pay federal and local taxes on the winnings.
When should you play the lottery?
I usually buy one ticket anytime the jackpot is higher than the stated odds of winning the jackpot. For the Mega Millions lottery, that means I will buy one ticket anytime it gets around $175 million or so.
Does that mean you should go out and spend your life savings on lottery tickets? Hell no! The actual expected rate of return over the long run is $.50 on the dollar.
But to spend $1 for fifteen minutes of dreaming is good, cheap fun.
Did I buy a lottery ticket on the 6th? You bet. I won $7.