Lottery Spending and the Odds of Winning the Lottery
Statistical analysis of lottery ticket purchases
Several studies have been published on the topic of lottery ticket purchases. Some of these studies focus on demographic groups, while others have looked at problem gambling and lottery spending patterns across education levels. The authors have used various methods to fit their models, including truncated tobit, Heckman-corrected tobit, probit regression, and more. The results of these studies were reported in a variety of different ways, including effect sizes and confidence intervals.
Odds of winning
The Mega Millions jackpot, which is topping $1 billion, can make you lose your common sense. But the odds of winning are low enough that even math professor Steven Diaz does not plan to buy a ticket. He’s available for interviews, however. The odds of winning the lottery are not astronomical. You have a 1 in 500,000 chance of being born with an extra toe or finger. A murder in the Grand Canyon is 35 times more likely.
Taxes on winnings
Despite being considered a “reward” prize, winning the lottery can still be taxed. The amount you receive is taxed at the fair market value of the winnings. In some cases, you can elect to accept a cash settlement in lieu of the prize, which can minimize taxes on the winnings. You can also choose to forfeit the prize, or donate it. In both cases, taxes on lottery winnings are due in the year of the winnings.