The Real Value of Powerball Tickets

There are two things you probably hear about the powerball:

  1. Woah! $1.5 billion!
  2. You’re more likely to get bit by a hammerhead shark while driving on the highway during a sandstorm (or some other highly unlikely event).

But this is actually kind of a fun event, because in a sense, buying a ticket for the current drawing is the smart money (kind of).

Let’s look at it:

  • The odds are listed on the official website as 1 in 292,201,338. In percentage form, that’s 1÷292,201,338=0.000000342%
  • Wow. That’s low. Wait a second, what’s the jackpot at again? $1,500,000,000.
  • So if you have a 0.000000342% chance at winning $1,500,000,000, that’s about $5.13 (%×$).

So your 2$ ticket is technically worth over 2.5 times its purchase value!

I really like this example because it’s yet another case where the intuitive conclusion doesn’t necessarily line up with the one informed by a closer look at the data. There are many cases like this, which is why, on a more serious note, we are such advocates for using whatever data is available to really make data-driven decisions.