Lottery is now $476 Million [Edit #3: Now $640 Million]

[Ad Orientem]

Holy bleep! That is just sick.  Has it ever been this high before?  I don't play the lottery too much but I am gonna drop a buck on this one just for the entertainment value.

[Storm]

Holy bleep! That is just sick.  Has it ever been this high before?  I don't play the lottery too much but I am gonna drop a buck on this one just for the entertainment value.

Statistically, you're better off sticking that extra dollar in the PP.

[Reub]

I've heard that the lottery is just a tax on stupidity but it sure is tempting!

[dualstow]

Hah, this is starting to look like a bogleheads thread. "Better odds in Vegas", etc etc.
I haven't played in years, but I may play this time. Just for fun, of course.

[Alanw]

Holy bleep! That is just sick.  Has it ever been this high before?  I don't play the lottery too much but I am gonna drop a buck on this one just for the entertainment value.

Statistically, you're better off sticking that extra dollar in the PP.

Your odds on winning this lottery are 175 million to one.  The fun in playing is talking about what you would do with the money if you did win.  Still, there is that 175m to 1 glimmer of hope.

[Ad Orientem]

If you are spending a buck for some cheap entertainment (a daydream) I don't think it's a big deal.  But I agree that spending more than that is a waste of money.

[Alanw]

If you are spending a buck for some cheap entertainment (a daydream) I don't think it's a big deal.  But I agree that spending more than that is a waste of money.

I agree.  Spending a buck to talk with your friends about what you would do for them if you won is cheap entertainment.

Would you actually change your lifestyle drastically if you did win?

[MediumTex]

If the odds are 176 million to 1, I assume that means that there are 176 million potential combinations of numbers that could be drawn.

If the jackpot is $476 million, why not just buy tickets covering all 176 million combinations, figure on expenses of $20 million or so to set up a data operation to fill out the lottery entries, and pocket the difference between the jackpot and the $196 million you spent (176 $1 tickets, plus your $20 million to fill out the entries)?

I'm sure there is a reason this wouldn't work, it's just not clear to me what it is.

[Ad Orientem]

If you are spending a buck for some cheap entertainment (a daydream) I don't think it's a big deal.  But I agree that spending more than that is a waste of money.

I agree.  Spending a buck to talk with your friends about what you would do for them if you won is cheap entertainment.

Would you actually change your lifestyle drastically if you did win?

I don't think significant lifestyle changes could really be avoided when you are talking about this much money.  Let's be frank here.  If you are the sole winner and even assuming you live in a very high tax state you are going to walk away with more than $150 million after taxes if you take the cash option (which would be the only sane course of action).  Your name and picture will be on the front page of every newspaper in the country.  You will be on CNN FOX and MSNBC.  Is your life going to change?  Yes, and probably pretty drastically.  

To be honest the more I think about it, the more I may just pass on the ticket.  I would love to win maybe $5 million.  That's enough to semi retire and set up comfortably somewhere warm and sunny.  This kind of money though seems more likely to cause serious trouble.  I have heard a lot of horror stories from about people who won lots of money and it ruined their lives.  Greedy family members and friends, being hounded by nut cases who saw their name in the paper, and of course the inevitable risk that money can facilitate whatever vices (and we all have some) that we struggle with.

[Alanw]

If the odds are 176 million to 1, I assume that means that there are 176 million potential combinations of numbers that could be drawn.

If the jackpot is $476 million, why not just buy tickets covering all 176 million combinations, figure on expenses of $20 million or so to set up a data operation to fill out the lottery entries, and pocket the difference between the jackpot and the $196 million you spent (176 $1 tickets, plus your $20 million to fill out the entries)?

I'm sure there is a reason this wouldn't work, it's just not clear to me what it is.

I'm not sure this is correct, but I think the $476m is paid out over 20 to 30 years.  You do have the option of taking a cash payment of about 50% of the $476m = $238m.  Then you would have to pay taxes of around 40% (just a guess).  Leaving you the paltry sum of only $142m.  Then if some lucky soul or two would happen to win also, your winnings would be reduced even further.  It's possible you could end up with less than $50m.  Hardly worth playing.

[Reub]

I would place most of my winnings immediately in a permanent portfolio. Wouldn't everybody? 

[Ad Orientem]

If the odds are 176 million to 1, I assume that means that there are 176 million potential combinations of numbers that could be drawn.

If the jackpot is $476 million, why not just buy tickets covering all 176 million combinations, figure on expenses of $20 million or so to set up a data operation to fill out the lottery entries, and pocket the difference between the jackpot and the $196 million you spent (176 $1 tickets, plus your $20 million to fill out the entries)?

I'm sure there is a reason this wouldn't work, it's just not clear to me what it is.

I'm not sure this is correct, but I think the $476m is paid out over 20 to 30 years.  You do have the option of taking a cash payment of about 50% of the $476m = $238m.  Then you would have to pay taxes of around 40% (just a guess).  Leaving you the paltry sum of only $142m.  Then if some lucky soul or two would happen to win also, your winnings would be reduced even further.  It's possible you could end up with less than $50m.  Hardly worth playing.

Just checked the web site and they have already raised the estimated jackpot to $500 million (annuity).

According to the website the way the lottery is paid out is you have the option of going with a near 30 year annuity or a cash option.  The annuity value is calculated as the value of the cash invested for you, probably in US Treasuries or something very similar.  Some single state lotteries invest in state issued government bonds.  Those tend to pay lower interest rates so the cash value will be a lower percentage of the advertised annuity value.  And of course you don't get any of the tax advantages of being invested in government bonds.  I would definitely not take the annuity.  Interest rates now are way too low.

The website tells you what the estimated cash value is.  Right now the lump sum pre-tax cash value is estimated at $359 million.  Less 35% (top Federal tax bracket) and another 10% (assuming a high state income tax) and you are left with $197 million(!) that's all yours.

[Alanw]

If you are spending a buck for some cheap entertainment (a daydream) I don't think it's a big deal.  But I agree that spending more than that is a waste of money.

I agree.  Spending a buck to talk with your friends about what you would do for them if you won is cheap entertainment.

Would you actually change your lifestyle drastically if you did win?

I don't think significant lifestyle changes could really be avoided when you are talking about this much money.  Let's be frank here.  If you are the sole winner and even assuming you live in a very high tax state you are going to walk away with more than $150 million after taxes if you take the cash option (which would be the only sane course of action).  Your name and picture will be on the front page of every newspaper in the country.  You will be on CNN FOX and MSNBC.  Is your life going to change?  Yes, and probably pretty drastically.  

To be honest the more I think about it, the more I may just pass on the ticket.  I would love to win maybe $5 million.  That's enough to semi retire and set up comfortably somewhere warm and sunny.  This kind of money though seems more likely to cause serious trouble.  I have heard a lot of horror stories from about people who won lots of money and it ruined their lives.  Greedy family members and friends, being hounded by nut cases who saw their name in the paper, and of course the inevitable risk that money can facilitate whatever vices (and we all have some) that we struggle with.

My guess would be, that anyone posting on this furum and subscribing to the Harry Browne and Permanent Portfolio philosophy, would not have a difficult time coming into a large sum of money.  By investing in a PermPort, already shows a responsible attitude toward money management.  Then again, who's to say they wouldn't go crazy if winning a $100m.

[flyingpylon]

The bottom line is that you can't win if you don't play.

I've thought about the possibility of purchasing all 176 million combinations, but in addition to the possibility of other people winning, there is the practical matter of purchasing 176 million tickets.  Seems like I read somewhere that "they" (whoever that is) did the math and given the speed at which the machines can issue tickets and all of that, it would be impossible.  Fun to think about, though.

This morning on my way to work I pondered how I could move the winnings into a PP without attracting too much attention...

[Storm]

It's fun to imagine what you would do with that money.  I'd definitely take the cash option and put it in the PP.  Then again, the real life tragedies of lottery winners are all too familiar a reminder of what can really happen when fortune strikes:

http://en.wikipedia.org/wiki/Jack_Whitt ... ry_winner)

[quote]Whittaker was the 55-year-old president of Diversified Enterprises Construction, a successful contracting firm in Putnam County, West Virginia, when he chose the correct numbers for the December 25, 2002 drawing. Whittaker had a net worth of over US$17 million before his Powerball windfall. Whittaker purchased the winning Powerball ticket at a supermarket in Hurricane, West Virginia, where he had stopped for a deli breakfast sandwich and to get fuel for his Lincoln Navigator.

The jackpot that day was a US$314.9 million annuity or US$170 million cash. Whittaker chose the cash option and received a check for approximately US$114 million[1][2] after tax withholdings.

Legal / personal problems

• On August 5, 2003, thieves broke into his car while it was parked at the Pink Pony, a strip club in Cross Lanes, West Virginia. The thieves went away with $545,000 in cash.[3] Two employees at the club, namely, the general manager and dancer manager, who were romantically linked, were later arrested and charged with a plot to put drugs in Whittaker's drinks and then rob him.[4]
• On January 25, 2004, thieves once again broke into his car, this time making off with an estimated $200,000 in cash that was later recovered.
• On September 17 2004, Jesse Tribble, an 18-year-old on-and-off-again boyfriend of Jack's granddaughter Brandi Bragg, was found dead in Whittaker's home in Teays Valley, West Virginia. A coroner's report indicated that he died from overdosing on a combination of oxycodone, methadone, meperidine and cocaine.
• On December 20 2004, Brandi Bragg, his granddaughter, 17, was found dead on the property of one of her male friends after being reported missing on December 9. Her body was wrapped inside a plastic tarp and dumped behind a junked van. No-one was charged with a crime and the death was ruled an overdose.[4]
• At an October 11, 2005 hearing related to his January 2003 DUI, a visibly shaken Whittaker lashed out at local law enforcement agencies for focusing on his troubles while failing to arrest anyone in relation to his granddaughter's death,[5]

“ Go after whoever killed my granddaughter with as much zealous [sic] as these butt holes are trying to convict me of something I didn’t do. ”?

• Whittaker is also being sued by Caesars Atlantic City casino for bouncing $1.5 million worth of checks to cover gambling losses. Whittaker is also countersuing them, claiming that his losses were supposed to be credited due to a slot machine he developed and that they in fact owe him money.[6]
• On January 11, 2007, a legal complaint against Whittaker alleged he claimed that on September 11, 2006, thieves took all of his money.[7] The thieves, according to the account, went to 12 branches of the City National Bank and cashed 12 checks. The incident came to light because Whittaker had not been paying money to a woman who had previously sued him. Kitti French filed the complaint earlier in the week, requesting court costs and money from Whittaker.
• On July 5, 2009, Ginger Whittaker Bragg, Jack's daughter and the mother of Brandi Bragg, was found dead in Daniels, Raleigh County, West Virginia. Foul play is not suspected, but toxicology tests are expected.[8]

[Ad Orientem]

Looks like it is now up to $540 million (pre-tax cash value $389 M).  I wouldn't be surprised if this thing hits $600 million before the drawing tomorrow night.  Nuts. Oh well I dropped my $1.  I wonder how much a private island runs? 

[Lone Wolf]

It's a funny thing.  I think that I might rather win $1 million dollars that nobody ever knew about than I would $600 million that the whole world knew about.

I enjoy my current life quite a lot.  More money in itself wouldn't harm that.  But feeling like a kidnapping target and a celebrity would, I imagine, make me less happy rather than more.  Does anyone else feel this way?

[Ad Orientem]

It's a funny thing.  I think that I might rather win $1 million dollars that nobody ever knew about than I would $600 million that the whole world knew about.

I enjoy my current life quite a lot.  More money in itself wouldn't harm that.  But feeling like a kidnapping target and a celebrity would, I imagine, make me less happy rather than more.  Does anyone else feel this way?

I completely agree.  Like I said earlier, I would love to win maybe $5 million.  That's enough to retire and live comfortably but not ostentatiously.  Hundreds of millions would be at the least a really major headache and maybe worse.  If I did win I would try to set up some kind of trust or LLC to claim the money and allow me to remain anonymous.  But ultimately it would be very hard to hide the fact you won that much money for very long.

[smurff]

Yes, Lone Wolf, I know what you mean. Sometimes there is comfort and security in anonymity, especially where money is concerned.

That said, I wonder whether lotteries like this have a maximum payout. Like, would there ever be a $1 billion pot?

[Ad Orientem]

Yes, Lone Wolf, I know what you mean. Sometimes there is comfort and security in anonymity, especially where money is concerned.

That said, I wonder whether lotteries like this have a maximum payout. Like, would there ever be a $1 billion pot?

In theory there is no limit to how high the jackpots can go.  In practical terms the volume of ticket sales virtually dictates that we will have a winner on Friday night, and quite possibly more than one.  To be honest I am stunned no one won the last drawing.  I saw some talking head on CNN last night who said that the number of tickets sold before Tuesday nights drawing should have produced a winner and that he never thought we would see a jackpot over $400 million unless the way they do the odds changed.  My guess is that this may be a once in a generation event.

[clacy]

If any of you guys who only want $5m win the whole enchilada, please get in touch with me and I'll gladly take the public spotlight off your back by claiming the ticket and we can set up a $5mm (after taxes of course).

[Alanw]

It's a funny thing.  I think that I might rather win $1 million dollars that nobody ever knew about than I would $600 million that the whole world knew about.

I enjoy my current life quite a lot.  More money in itself wouldn't harm that.  But feeling like a kidnapping target and a celebrity would, I imagine, make me less happy rather than more.  Does anyone else feel this way?

I completely agree.  Like I said earlier, I would love to win maybe $5 million.  That's enough to retire and live comfortably but not ostentatiously.  Hundreds of millions would be at the least a really major headache and maybe worse.   If I did win I would try to set up some kind of trust or LLC to claim the money and allow me to remain anonymous.  But ultimately it would be very hard to hide the fact you won that much money for very long.

I've always been of the opinion that you cannot have too much money.  In this case, I'm not sure.  I definitely wouldn't turn it down though.  My wife and I have talked about how we would spend the winnings and the only thing we could come up with to change our lives would be to fly first class or private jet when we travelled and maybe stay in 5 star resorts.  Flying coach is a bummer on long trips.

Imagine how many financial planners and stock brokers would be trying to get in touch with you.  The sales pitch would go something like this: "Now that you have $500m, wouldn't you like to have 1 billion, and I'm just the guy to show you how to do it."  Nooooooooo, leave me alone.

[Bob]

I once played the lottery in California about 20 years ago.  For the fun of it, I bought $5 in lottery tickets today.  There were 4 people in line in front of me at the local Valero, each buying tickets for the upcoming drawing.  The jackpot is so huge that it seems like this thing is taking on its own momentum --- I'm sure there are a whole bunch of people like me who haven't played the lottery in years but are doing it this time.  That just adds to the jackpot.  It stood at around $467 million yesterday, was at $500 million when I bought my ticket earlier today, and is now at $540 million, and growing.  

I agree with Lone Wolf who said he would rather win $1 million and not be known than to win this and have everyone know that you are the winner.  However, I'm not worried about winning as my chances of getting struck by lightning are greater than winning this thing - and currently the skies are clear!

[Alanw]

I once played the lottery in California about 20 years ago.  For the fun of it, I bought $5 in lottery tickets today.  There were 4 people in line in front of me at the local Valero, each buying tickets for the upcoming drawing.  The jackpot is so huge that it seems like this thing is taking on its own momentum --- I'm sure there are a whole bunch of people like me who haven't played the lottery in years but are doing it this time.  That just adds to the jackpot.  It stood at around $467 million yesterday, was at $500 million when I bought my ticket earlier today, and is now at $540 million, and growing.  

I agree with Lone Wolf who said he would rather win $1 million and not be known than to win this and have everyone know that you are the winner.  However, I'm not worried about winning as my chances of getting struck by lightning are greater than winning this thing - and currently the skies are clear!

Momentum always seems to increase as the prize increases.  It's almost as though the purchasers of the tickets would not be able to dig themselves out of their current financial hole with a $20 million jackpot, but $50 million would solve all their problems.  And $500 million, now that would really be a life changing event.

[rhymenocerous]

If I won, I'd be most afraid of something happening to either me or the ticket before I could cash it in.  I don't think I could handle that kind of pressure.  Is there any harm in just dumping the full cash prize into a treasury money market account right away?  Everyone always talks about setting up fancy trusts or charitable foundations to deal with taxes, but does anyone know if those things can be done after you accept the money?  I'm just curious.

Edit:
Also, for fun I'd put:
$50m into US stocks
$50m into LTT's directly
$50m into a Treasury Money Market
$10m in GTU
$40m in physical gold located in a segregated account at a bank, and fully insured

I think I could manage the whole thing for like 5 basis points.  Tell that to all those advisors that would hound you incessantly.

The rest of the money I'd probably blow on real estate.  The funny thing is though, that aside from buying a nice home and taking a few vacations, I can't think of anything else to do with the money that isn't utterly wasteful.  I'd probably just devote my time to creating some kind of charity to give the money away.  Just as a random question on the nature of charity, do you think it's better to give a hungry man food so he can eat, or build him a library so he can get a free education, a job, and then provide for himself?  While both are important, I think I'd want to focus on trying to help people improve their lives themselves, though I don't know how I'd do that yet!