Published by Tyler Schlumpf and the Carson Group Partners Investment Committee
We definitely have fun to getting swept away in the “what if’s” of instantly coming into a large sum of money, hopefully most people are rational though and understand they are playing to be a part of it but don’t necessarily believe they will win. The research team was recently asked to give our opinion on the odds of winning. After snapping out of the daydream we pulled together some stats.
The odds of winning the recent Powerball were 1:292,000,000. If you were to purchase 1 ticket a day for a year (or 365 tickets one day each year), you would have a 0.000125% chance of winning in any given year. In reality, that means you can be 99.999875% certain that you will not make any money and the money you paid to purchase the tickets is simply gone.
If you were to invest in the S&P 500, there is a 67.05% chance of gaining a positive return (anything return greater than 0%) in any given year. The inverse of that is a 32.95% chance of a flat or negative return in any given year. However, even in a down year it would be unlikely that the assets would go to $0.00. Assuming a $2 ticket price and 365 tickets per year, an annual expense for lottery tickets would be $730.00 per year. If you would have invested that $730 in the S&P 500 at inception it would have grown to ~$90,000 today. Inception for the S&P 500 is 1923 and while looking back over 90 years seems extreme, it would take 800,000 years to win the lottery if you purchased 1 ticket a day with 1:292,000,000 odds.