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Mega Million, great play!!! For the government. Not VP

#1

So U play with $ 2 that are taxed before U get it. UP front the government gets a 50% hold on the play.

Winner gets 1000 million (1 billion). Government nets roughly 1/2 of win in taxes . So odds about 1 chance in 302 million x $2 = 600 million. On that exact scenario player makes 300million and government nets 300.

  300 mill lottery slice for selling

  150 mill lottery income tax

  120 mill estimated taxes on $ earned that were wagered
···

$570 million profit for states on $600 million hit???

I"m not a math guy. How flawed is my quick calculation??

good luck to all that played. Not a bad win!! Jeep

#2

There are very few things you can buy with pre-tax dollars, so it doesn’t make much sense to consider the pre-tax value of the $2 you spend on a lottery ticket.

Pundits say the 1.6B 30-year annuity is worth about 905M as a lump sum payment. The federal tax rate on that amount would be 37%, leaving 570M after tax. State income tax will take another bite depending on where you live. The odds are roughly 303M : 1. If there is only a single winner it is a decent overlay. Unfortunately there is a significant chance there will be multiple winners. For a simple example, if you assume there is a 20% chance of two winners your jackpot equity would be (.8 X 570M) + (.2 X 285M) = 513M.

Caveat emptor.

Gamb00ler

whitejeeps said:

So U play with $ 2 that are taxed before U get it. UP front the government gets a 50% hold on the play.

Winner gets 1000 million (1 billion). Government nets roughly 1/2 of win in taxes . So odds about 1 chance in 302 million x $2 = 600 million. On that exact scenario player makes 300million and government nets 300.

  300 mill lottery slice for selling

  150 mill lottery income tax

  120 mill estimated taxes on $ earned that were wagered
···

$570 million profit for states on $600 million hit???

I"m not a math guy. How flawed is my quick calculation??

good luck to all that played. Not a bad win!! Jeep

#3

Hi gambo

Any way , allowing 40% for taxes and the profits from selling tickets the “State” is doing good. How did the government operate before lottery?

Purchasing lottery with funds left after taxation makes sense to Canadians. Long ago I hit $4000 in Niagara Falls Canada. I asked for Large bills. Slot person brought me 4 one thousand dollar bills. I asked, are u taking taxes out of win. No, she said. We believe you paid taxes once when you earned your gambling money.

Sounded good to me. I often wondered why it didn’t catch on in USA? It was a good point.

Cheers…Jeep

I did drop a few bucks with a group. Should be enough left to split up between a few.

#4

Coupla points, there are sub-prizes in the lottery, you should include that in your EV calculation, and Canada doesn’t tax gambling wins, why do you think so many gamblers have moved to Canada? Plus Canada hasn’t outlawed internet gambling. But you do need a block heater for your car in many places. And good luck getting a place to stay in Vancouver.

#5

In my post I only mention “jackpot equity”. The other payouts add about 16.3% to total equity. California uses a different method than all other states for deciding what some of the non grand prize payouts would be.

The payer of any substantial win to a Canadian would withold 30% of the prize. A Canadian winner would fare slightly better than a US resident if that would be his total US tax liability.

Gambling winnings in Canada are taxable if gambling is your main source of income. I believe their enforcement on this is currently very weak. If you want the nitty-gritty read:

https://gamingcounsel.co/pdf/The%20Tax-Exempt%20Status%20of%20Gambling%20Winnings%20in%20Canada.pdf

nightoftheiguana2000 wrote :

Coupla points, there are sub-prizes in the lottery, you should include that in your EV calculation, and Canada doesn’t tax gambling wins, why do you think so many gamblers have moved to Canada? Plus Canada hasn’t outlawed internet gambling. But you do need a block heater for your car in many places. And good luck getting a place to stay in Vancouver.

#6

gamb00ler wrote: “The payer of any substantial win to a Canadian would withold 30% of the prize.”

That’s just a withholding, you can apply to get it back.

#7

For Canadians doing a U.S. tax return you owe the IRS %30 of your net winnings. So on a huge lottery win you wouldn’t be getting much back unless you were playing some really big stakes and losing some really big money. The one thing to realize is that if you had one of those huge wins, any losses would come with a %30 discount. If I ever won a monster like that I would be playing some very high denomination VP for the rest of that year.

Regards

A.P.

···

From: “nightoftheiguana2…@…com [vpFREE]” <vpF…@…com>
To: vpF…@…com
Sent: Thursday, October 25, 2018 3:29 PM
Subject: [vpFREE] Re: Mega Million, great play!!! For the government. Not VP

gamb00ler wrote: “The payer of any substantial win to a Canadian would withold 30% of the prize.”

That’s just a withholding, you can apply to get it back.

#8

I calculated state hold as 50% hold on all bets and games. 3 digit number for 1000 possible numbers pays $500. Progressive Pa games calculate the sub prizes and progressive totals at 50% state hold & 50% win to player. EV 50%. I don’t know for sure if multi State games use 50% as player win EV.

Canada is nice to visit. Cheers…Jeep