Financial Planning 101 preaches there is no greater fundamental truth than the fact that buying a lottery ticket is a waste of money. It is a tax on irrationality for most and on desperation for some. Instead of spending the money on lottery tickets, you can pay down debt, invest in high-quality stocks or bonds, or donate the money and get the tax write-off. With Powerball Lottery fever sweeping the nation — the latest drawing is expected to be in the neighborhood of $1.5 billion, the biggest lottery jackpot of all time — the dreams of winning the money become intoxicating for anyone who buys a ticket. That is a lot of money. 

But it is always a terrible idea to buy a lottery ticket.

Except for maybe now. 

Relying on our behavioral economics "expected value" training (and our love for the French mathematicians Blaise Pascal and Pierre de Fermat), we know that the value of a future gain in a "probabilistic" event like a lottery drawing should be directly proportional to the chance of obtaining it. The math is rather simple: take all the possible outcomes of the lottery drawings minus the cost of actually playing (in this case $2) and multiply each of those possible outcomes by its probability of actually happening. Then add up those numbers. The sum is the expected value of the lottery drawing. The Powerball Lottery website publishes the odds of winning and makes the after-tax calculations (yes, Uncle Sam needs to take his cut) pretty easy:


Given the huge size of the jackpot, the expected value is a positive $0.92! It is no longer irrational to buy a lottery ticket, i.e., wherein the expected value is a negative number (BTW - the crossover point is about $875 milllion). Of course, this calculation does not take into account some of the other nuances associated with lottery, namely state income taxes, the annuity vs. lump sum issue and the possibility of multiple winners. 

Based on our simple math, there has never been a better time to buy a lottery ticket ... and when you win, we would be happy to help you create a financial plan!




This material is for informational purposes only and is not intended to serve as a substitute for personalized investment advice or as a recommendation or solicitation of any particular security, strategy or investment product.  The opinions expressed do not necessarily reflect those of author and are subject to change without notice. Past performance is not indicative of future results. Reference to an index does not imply that a portfolio will achieve return, volatility, or other results similar to an index. Performance of an index is not illustrative of any account, portfolio or strategy managed by Sequoia Financial Group. It is not possible to invest directly in an index.

The views expressed represent the opinion of Sequoia Financial Group. The views are subject to change and are not intended as a forecast or guarantee of future results. This material is for informational purposes only. It does not constitute investment advice and is not intended as an endorsement of any specific investment. Stated information is derived from proprietary and nonproprietary sources that have not been independently verified for accuracy or completeness. While Sequoia believes the information to be accurate and reliable, we do not claim or have responsibility for its completeness, accuracy, or reliability. Statements of future expectations, estimates, projections, and other forward-looking statements are based on available information and Sequoia’s view as of the time of these statements. Accordingly, such statements are inherently speculative as they are based on assumptions that may involve known and unknown risks and uncertainties. Actual results, performance or events may differ materially from those expressed or implied in such statements. Investing in equity securities involves risks, including the potential loss of principal. While equities may offer the potential for greater long-term growth than most debt securities, they generally have higher volatility. Past performance is not an indication of future results. Investment advisory services offered through Sequoia Financial Advisors, LLC, an SEC Registered Investment Advisor. Registration as an investment advisor does not imply a certain level of skill or training.

Sequoia Financial

Talk to an Advisor

We would love to chat with you about how Sequoia can help you achieve your financial goals.

  • Akron, OH - Headquarters
  • Tampa, FL
  • St. Clair Shores, MI
  • Troy, MI
  • Beachwood, OH
  • Cleveland, OH
  • Columbus, OH
  • Mayfield Heights, OH
  • Hilton Head, SC

© 2022 Sequoia Financial Advisors, LLC

Investment advisory services offered through Sequoia Financial Advisors, LLC, an SEC Registered Investment Advisor. Registration as an investment advisor does not imply a certain level of skill or training.

On Financial Planning & Powerball | Sequoia Financial Group


The website encountered an unexpected error. Please try again later.