The jackpot is more than $500 million — so here's why you should not buy a lottery ticket

Both the Powerball jackpot and the Mega Millions jackpot have passed the $500 million mark. It remains to be seen whether either approaches the all-time Powerball jackpot of $2.04 billion that was won Nov. 8, 2022. More recently, a $1.348 billion Mega Millions jackpot was won Jan. 13.

When these jackpots soar, ticket sales soar with them, further pushing the jackpots higher and helping the lottery agencies make even more profit.

Using data on past Mega Millions drawings, when the jackpot is low — typically at or near its starting point of $20 million — around 6 million to 10 million tickets are sold for each drawing, including “Just the Jackpot.” On April 14, when the jackpot hit $476 million, around 24 million tickets were sold. On Jan. 13, when the jackpot hit $1.348 billion, around 173 million tickets were sold. With both jackpots more than $500 million, the one that remains unwon the longest will likely reap the highest sales afterward.

But is it a good idea to buy tickets when the jackpot gets this large?

Given the long odds of winning, it only makes sense to buy a ticket when the jackpot is extremely large. With so many tickets purchased, the likelihood of sharing the prize is greater than when the jackpot is smaller and fewer tickets are sold. Splitting $500 million with three people results in more money than winning $20 million by yourself.

Of greater concern is the possibility, albeit small, of actually winning the jackpot.

Most winners opt for the lump sum, which is a mistake. Having a steady stream of income for three decades is financially comforting and secure. It also reduces the burden of managing a large payout, with all its investment and tax responsibilities.

When the jackpot is $20 million, the first annual payout is $300,000, growing by 5 percent each year until it reaches just more than $1.2 million in the final year (the 30th payout). This first-year payout would put the winner in the top 5 percent of all wage earners in the nation. Most people would live quite comfortably with such an income.

When the jackpot hits $200 million, these annual payouts are scaled up by a factor of 10 (starting at $3 million in the first year with the final year payout at $12 million). This places the winner in the top 0.1 percent of earners. Move the jackpot up to $1 billion and the numbers scale further up by a factor of five.

For most people, having access to an income of millions of dollars per year is beyond anything that they have experienced in their lifetime. This explains why some lottery winners struggle after their big win. Many find the adjustment to their newfound wealth challenging at best or overwhelming at worst.

We have all heard the expression, “money cannot buy happiness.” Research has shown that some money can indeed buy happiness, but more money beyond a certain point is not necessarily better. Money can buy opportunities to travel, which give people experiences that can enrich their lives. Money can buy opportunities to get education, which gives people perspective that can give them fulfillment. Money can buy the opportunity to use your time how you wish.

What this means is that winning the lottery jackpot may improve your life, but winning it “too much” will not make it much better. Plus, if the money becomes a burden rather than a fuel for opportunities, it can become a hindrance and make people’s lives worse than they were before their big win.  

So now that the Powerball and the Mega Millions lottery jackpots have crossed the $500 million thresholds, the smart lottery players will sit on the sidelines until someone else wins the jackpot. The risk of actually winning, albeit infinitesimally small, is something to avoid.  

Of course, the biggest winners are those who never play the lottery. Only around 60 percent of the money spent on lottery tickets goes for prizes, and the rest is kept by the lottery agencies and commissions who run and sponsor them. This means that every lottery ticket not bought is money won by the non-player. To such people, I commend your wise choice and applaud you in your smart decision.

Sheldon H. Jacobson, Ph.D., is a professor in computer science at the University of Illinois Urbana-Champaign. A data scientist, he applies his expertise in data-driven risk-based decision-making to evaluate and inform public policy