Any Long Term Lotto Players

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Any Long Term Lotto Players

Anyone here a long term lotto play or know of anyone (relatives or friends) that have been playing for years? Have they had any success?

I'm curious if Lotto is more of a long term strategy than a short term. I want to share this lotto site because it has alot of insights: http://www.moreaboutwinninglottery.com/.
Last edited by itsadam on Fri Jul 05, 2013 7:14 am, edited 1 time in total.
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Re: Any Long Term Lotto Players

Basic probability shows that the lottery is not a retirement plan. You can expect to lose: those who win are the exception, not the rule, and the winnings are never equal to (or greater than) the losses.

Consider an alternative way of looking at it. Would businesses be running a lottery if they paid out more than they brought in?
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Re: Any Long Term Lotto Players

My opinion on Lotto is that it is a stupidity tax.

99.999% of people who play it lose money. With odds like that, who cares if the jackpot is life changing? You have more chance of being made rich by a clerical banking error.
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Re: Any Long Term Lotto Players

itsadam wrote:I'm curious if Lotto is more of a long term strategy than a short term.

The odds are against you either way. The reason Lotto exists in the first place is to raise money for the state, not to make individual players rich. Do the math.

If it's an occasional thing just for fun, and you're not spending a lot of money on it, I don't see the harm. But IMO if any more than a fraction of a percent of your income is being spent on Lotto tickets, you've got a problem.
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Re: Any Long Term Lotto Players

It can be fun on occasion to waste a few dollars on a ticket, IMO.

And yeah it's not a long term thing ever.
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Re: Any Long Term Lotto Players

superjawes
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Re: Any Long Term Lotto Players

If you play when the expected return is highest (massive powerball jackpots) and choose numbers strategically*, it can be a fun way to expose yourself to some good random chance.

*Although many people randomly select numbers, others put in birthdates and anniversaries, or the numbers from Lost, so it is better to avoid low numbers. If you have to share a \$500 million jackpot with 10 people, all of a sudden the expected return isn't so good.
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Re: Any Long Term Lotto Players

Personal rules:

1: Play only when annuity jackpot exceeds odds of winning.

2: Spend no more than a fin on each draw.

3: Expect a long-term return of -100%.
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Re: Any Long Term Lotto Players

Captain Ned wrote: Play only when annuity jackpot exceeds odds of winning.
Why worry about the potential return? After some point, the money doesn't do much more for me. I hardly ever buy a lottery ticket, but if I won \$3,000,000 or \$300,000,000, I would expect the effect to be about the same.
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Re: Any Long Term Lotto Players

If you want to, you can rationalize playing the lottery by saying that the marginal improvement by keeping \$5 a week (or whatever) is negligible and smaller than the very small probability of a massive change in quality of life.

Alternatively, rephrase the question: if you were a rich person, would you pay an equivalent percentage of your income to avoid a very small probability of losing almost all of your wealth?
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Re: Any Long Term Lotto Players

JustAnEngineer wrote:Why worry about the potential return? After some point, the money doesn't do much more for me. I hardly ever buy a lottery ticket, but if I won \$3,000,000 or \$300,000,000, I would expect the effect to be about the same.

A life spent working in the financial world tells me that the effects are vastly different. The average \$3MM winner is at great risk of having spent it all in less than 12 months, while the \$300MM winner usually needs 4-5 years to do the same.

EDIT: Should anyone here ever be so lucky as to win a major lottery prize, your first visit is not to the lottery office to get your check. No, your first visits are to a financial consultant and a tax lawyer. You do not claim the prize until all of the needed financial infrastructure (mainly to stop you from spending like a drunken monkey) and estate planning are in place.
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Re: Any Long Term Lotto Players

Captain Ned wrote: A life spent working in the financial world tells me that the effects are vastly different. The average \$3MM winner is at great risk of having spent it all in less than 12 months, while the \$300MM winner usually needs 4-5 years to do the same.

Holy crap! They blow through say \$100MM in that time? I mean if you get \$300MM, after lump sum and taxes it's maybe \$160MM or something. Don't they invest any of it?

I can't imagine the craziness of spending that much money in that time.
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Re: Any Long Term Lotto Players

Hawkwing74 wrote:Holy crap! They blow through say \$100MM in that time? I mean if you get \$300MM, after lump sum and taxes it's maybe \$160MM or something. Don't they invest any of it?

I can't imagine the absurdity of spending that much money in that time.

Look at the demographics of chronic lottery players/winners. They simply don't know what to do with money when they have it and they end up blowing it on "cousin Bob's hot investment scheme" or other such stupidities. The lottery poverty effect has been well-documented in several academic papers.

EDIT: The recent \$600MM Powerball prize had a cash value of around \$320MM IIRC. My guesstimate of net after tax withholdings was \$192MM. My rule of thumb (and this will vary by state) is that I'll get a check for 60% of the cash prize. Both of the big multi-state lotteries (Powerball & MegaMillions) will not let you accept the prize anonymously, so you can imagine how those winners who have no financial skills whatsoever are bombarded by shysters just looking for a slice of the pie. That's where most of the lost money goes.
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Re: Any Long Term Lotto Players

Captain Ned wrote:
Hawkwing74 wrote:Holy crap! They blow through say \$100MM in that time? I mean if you get \$300MM, after lump sum and taxes it's maybe \$160MM or something. Don't they invest any of it?

I can't imagine the absurdity of spending that much money in that time.

Look at the demographics of chronic lottery players. They simply don't know what to do with money when they have it and they end up blowing it on "cousin Bob's hot investment scheme" or other such stupidities. The lottery poverty effect has been well-documented in several academic papers.

EDIT: The recent \$600MM Powerball prize had a cash value of around \$320MM IIRC. My guesstimate of net after tax withholdings was \$192MM. My rule of thumb (and this will vary by state) is that I'll get a check for 60% of the cash prize.

Yarp.

Here in the forums, I think we have a higher concentration of "smart" people, but even then, if you don't have experience handling a lot of money, you probably aren't going to think of lining up your investments, legal matters, and will. Heck, I imagine 95-99% of people who actually play the lottery don't even have a will.
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Re: Any Long Term Lotto Players

superjawes wrote:Heck, I imagine 95-99% of people who actually play the lottery don't even have a will.

Hmm, note to self ...

Off to find a good "will-in-a-box" provider.
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Re: Any Long Term Lotto Players

On financial matters, the only book I have read that makes mathematical sense (and I have read A LOT) is William Bernstein's The Four Pillars of Investing.
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Re: Any Long Term Lotto Players

Ditiris wrote:On financial matters, the only book I have read that makes mathematical sense (and I have read A LOT) is William Bernstein's The Four Pillars of Investing.

Well, when it comes to a mega-prize, a 2% annual return on \$200MM invested is stil \$4MM. I think I could live on that in expectation of future rate increases.
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Re: Any Long Term Lotto Players

I am in 2 lotto pools. Been in them for quite a few years.
Rules in Canada are a little different... there is no tax on lotto wins so we get to keep it all if we win. The trade off seems to be that our lotteries don't get as high as powerball and such.

to answer your question lotto is neither long term or short term strategy.
If you hit the random luck win... congrats. but you can play lotto for multiple life times and never win.

in our pools we've had the occaisional \$50 - 100 winner but are down thousands that we put into it.

The reason most of the people in the work pool buy in is that they don't want to be the person stuck behind if the rest of us hit it big... not because they think we will win.
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Re: Any Long Term Lotto Players

Arvald wrote:The trade off seems to be that our lotteries don't get as high as powerball and such.

Well, there is the slight population delta.
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Re: Any Long Term Lotto Players

Captain Ned wrote:
Arvald wrote:The trade off seems to be that our lotteries don't get as high as powerball and such.

Well, there is the slight population delta.

Also one of our national lotteries implemented a \$50MM prize cap.
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Re: Any Long Term Lotto Players

Arvald wrote:Also one of our national lotteries implemented a \$50MM prize cap.

Heh. Powerball starts at \$40MM and MegaMillions at \$20MM.
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Re: Any Long Term Lotto Players

Gamblers don't play these games. They can usually count.

Now it used to be illegal. Why? Well because it's a tax on the stupid ... eh'.
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Re: Any Long Term Lotto Players

Chrispy_ wrote:My opinion on Lotto is that it is a stupidity tax.

This. The house always wins in the end but your odds are better at a casino, which has a 95+ percent payout rate after comps, subsidies etc. are factored in, than a lottery which depending on the state has around a 60 to 75 percent payout rate.
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Re: Any Long Term Lotto Players

Chrispy_ wrote:My opinion on Lotto is that it is a stupidity tax.

The more gentle formulation is "a tax on people who can't do math," but either way, it works out the same. The odds of winning lotto are as bad as the odds of winning the random sweepstakes-of-the-month offer in the junkmail pile, except that you pay to participate. Greed makes people do some interesting things.

Even if it was, say, \$5/week, that's \$260/year that could be sunk into something equally frivolous yet tangible. A 25yo Scotch, some electronic gizmo, concert tickets, an unnecessary but amusing household improvement...
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Re: Any Long Term Lotto Players

Similarly, the movie theater is a tax on stupidity because its expected financial return is \$0.
Last edited by jossie on Tue Jun 11, 2013 2:16 pm, edited 1 time in total.
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Re: Any Long Term Lotto Players

ludi wrote:
Chrispy_ wrote:My opinion on Lotto is that it is a stupidity tax.

The more gentle formulation is "a tax on people who can't do math," but either way, it works out the same. The odds of winning lotto are as bad as the odds of winning the random sweepstakes-of-the-month offer in the junkmail pile, except that you pay to participate. Greed makes people do some interesting things.

Even if it was, say, \$5/week, that's \$260/year that could be sunk into something equally frivolous yet tangible. A 25yo Scotch, some electronic gizmo, concert tickets, an unnecessary but amusing household improvement...

I don't play lotto but my father has for decades. I don't think he even plays for the money, he plays it because it gives him something to do in his retirement and it is more of a hobby for him. He will spend hours doing statistical analysis trying to improve his odds. Hell he bought me my first PC (Tandy 1000 EX) back in December 86 just so I could program him some applications to do the statistical analysis for him. He knows he is more then likely never to win the big one but it keeps his mind sharp and gives him a hobby.
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Re: Any Long Term Lotto Players

jossie wrote:Similarly, the movie theater is a tax on stupidity because it's expected financial return is \$0.

No I think you're the one confused here. We go to movies for entertainment.
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Re: Any Long Term Lotto Players

Analysing the Lotto may wel be a hobby that provides its own entertainment value.

Playing it for anything other than entertainment value is a waste of money, and ranks as one of the wost possible investments anyone can ever make. Stock market and casino gambling are definitely better (but still poor) options because having a 1% chance to win \$1000 is always going to be better than having a 0.000005% chance of winning \$200M. Higher chance, lower return at least means that in a decade of playing you may actually get a win.

I convinced a colleague about 8 years ago to give me her £3 a week that she was playing the National Lottery with. She had a crappy 20" non-widescreen CRT television and after about 18 months I found her a shop-soiled (unboxed and missing the stand) 32" Toshiba HDTV and bought a wall-mount kit for her. From four analogue channels and movies letterboxed at the wrong ratio she upgraded to 100+ digital freeview channels, quadrupled her screen size for widescreen movies, reclaimed a couple of feet of living-room width and had a second TV for the bedroom. To someone who watches 30+ hours of TV a week that's quite a life-changing difference that Lotto money was robbing from her (although just one of infinite possible examples).

I moved on from that office a few momths later, but to my knowledge, the office syndicate won a total of about £800 for the three years I was there, and a quick estimate says they put almost £20,000 into tickets.
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Re: Any Long Term Lotto Players

Look, many have raised good points and even those who point to it being a "stupidity" tax are completely right, though I sometimes think that those that say thta are just trying to justify why they do not bother.lol.

Here is the thing, for myself anyways, I do not partake in every draw, far from it but I try to do one a week and you know why, its fun to dream and I find that dreaming sure as heck helps to make the work week go faster, its as simple as that for me.

Then you look at the money aspect, I know some do, and I'm not one,lol, but keep track of the money you spend in a week, how many people are always buying at least 1 coffee a day or something else similar, yet we all can have much cheaper coffee from home.

Some folks buy even higher cost items that one can either do without or get it from home, so in turn to spend one of those days wasted couple bucks on a lottery ticket for me anyways is a logical choice for the reason I just mentioned.

To each is own I suppose, clearly I can see the odds but I can also clearly see that someone wins all the time.
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Re: Any Long Term Lotto Players

Captain Ned wrote:EDIT: Should anyone here ever be so lucky as to win a major lottery prize, your first visit is not to the lottery office to get your check. No, your first visits are to a financial consultant and a tax lawyer. You do not claim the prize until all of the needed financial infrastructure (mainly to stop you from spending like a drunken monkey) and estate planning are in place.

Absofragginlutely. Might not hurt to visit a general lawyer to see about how best to protect your privacy while you're at it so random people aren't beating down your door asking for money.
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