The estimated Powerball jackpot is now $1.6 billion, the largest lottery jackpot in the world. But, with the odds of winning being less than 1 in 292.2 million, is it even worth playing?
Victor Matheson, professor of economics at the College of the Holy Cross and a lottery expert, believes that Powerball’s organizers have gradually made their lottery harder to win for decades.
When asked about his prospects of getting a winning ticket, Matheson told The Washington Post that the math doesn’t work out very well for gamblers.
“It’s all a matter of perspective,” Matheson said. “If someone is spending $2 to play the lottery for financial gain, that’s a terrible reason to buy a ticket. But if it’s about entertainment and spending $2 to dream with friends and family, that’s a sound investment.”
“The chances of winning are almost exactly the same whether you buy a ticket or not.”
That being said, if you do beat the odds and win, how should you consider investing the money? According to Matheson, whatever you do, do not take a lump-sum payout and put it in a high-yield savings account, but rather consider investing the money in the stock market.
“I don’t mean putting the money into junk bonds, or Tesla or tech or forex,” said Matheson. “I mean putting it into broad-based index funds, like any S&P 500 index fund. In that scenario, you take the tax hit up front, but in the long run, index funds average 7% to 8%, so you’re likely to come out ahead over time. But you have to invest aggressively.”
Relevant Coverage:
CNBC, Nov. 2
The Washington Post, Nov. 2
People, Nov. 2
Fortune, Nov. 3
Los Angeles Times, Nov. 4
CNN, Nov. 6
