Tuesday, February 16, 2010

A When to Buy Mega Millions or Powerball Guide

On January 31st 2010, sales of Powerball and Mega Millions expanded into each other's jurisdictions. No longer are States classified as either one lottery or another. Now, players in most States have the opportunity to buy both games.

This cross-selling is great for players when the Jackpots are high and for the hard-core lottery players. But what about the regular or occasional player on a limited budget? Now they are faced with three important questions:
  • Which Lottery is Better to Buy?
  • Should I Buy the Powerplay or Megaplier Option?
  • Can I Afford It?

Whats' the Problem?
Initially when players could only buy one game, it was easy to set a budget. In most of the old Mega Millions states, folks could spend $5 per game, or $10 per week, or $520 per year. Those in Texas had the option of spending $1 extra per ticket to buy the Megaplier. For them, their budget would be $1,040 per year.

Similarily, everyone in the Powerball states could choose whether to buy an individual ticket or one with the Powerplay Option. But, they too could maintain a budget of $520 - $1,040 per year.

But now, the games are doubled, and so is the yearly expenditure. While we don't know if people can afford to spend $2,080 per year on the big prize lotteries, we expect that this is a lot of money for them. To us, this is a big problem.

Difficult Choices
In previous articles and published webpages, we introduced the concept of Jackpot return. This number indicates how much money a lottery will pay out in prizes verses how much was collected.

Each lottery, and variation thereof, has it's own Jackpot return. This number increases linearly as the Jackpot grows. Thus, it is easy to calculate the implied breakeven of the Megaplier and Powerplay Options. And from this, we can recommend whether to buy these options or not.

However, when multiple games are compared, it becomes difficult to decipher one's choices.

Graph MMPB-GR01 below illustrates the Jackpot Returns for Powerball and Mega Millions, and their associated Powerplay and Megaplier Options. As seen, all of these returns appear to intersect at points where the Jackpots are somewhere between $47 and $65 million.

Addtionally, the Mega Millions and Powerball Jackpots do not move in parallel. Mega Millions may be $40M, and Powerball only $20M. So, what should one do?

What to Buy Matrix
To help simplify this information we have created a "What to Buy Matrix" below. The data is organized horizontally by the Powerball Jackpot ranging from $20-$300 million.  Vertically is the Mega Millions Jackpots, with values for $12 to $300 million.

The cells are color-coded.
The light blue indicates that you should buy the Powerplay Opton;
The dark blue indicates that you should buy the Powerball Only;
The light red (pink) indicates that you should buy the Megaplier Opton;
The dark red indicates that you should buy the Mega Millions Only;

Powerball Jackpot

The table assumes that a player is willing to buy the Powerplay or Megaplier Option. But, the player will only buy one lottery or another.

To read the table, you can locate the row with the Mega Millions Jackpot. Then, read across the columns to the current Powerball jackpot. If the intersecting cell is: red, then buy Mega Millions; blue, buy Powerball; pink, Megaplier; or light blue, Powerplay.

Returning to the example above when the Mega Millions is $40M, and Powerball only $20M, a player should buy Mega Millions with the Megaplier Option!

In the beginning of this article, we raised three questions.

  • Which Lottery is Better to Buy?
  • Should I Buy the Powerplay or Megaplier Option?
  • Can I Afford It?
We believe the first two are answered in the "What to Buy Matrix", which tells you which lottery is better to buy, and if you should buy the Megaplier or Powerplay option.

The "Can You Afford It" answer is really up to you. Our recommendation is that those on limited budgets should only buy one lottery or the other.  The matrix above indicates which lottery you should buy, and if you should buy the Powerplay or Megaplier Options.

Since these options are only recommended when the Powerball & Mega Millions jackpots are $50 million or under, we believe that it is not necessary to buy these all the time. This means that your budget will not substantially increase, and that Most Can Afford It!

Let Us Know
We hope this information is helpful to everyone. During the past month, we have followed this advice, and we hope that you will as well!


1 comment:

  1. A stumble and a mixx!
    Awesome runthrough, definitely worth a try. I have a friend who frequently goes over the power ball results and runs some excel formula he made up - he never won the jackpot yet but he gets 3rd and 4th prizes all the time. He wouldn't tell me what the formula is but the dude does this full time and lives nicely.


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