Is It Possible to Guarantee a $1.4 Billion Powerball Win?

This Wednesday’s Powerball jackpot is a record-setting $1.4 billion.

Money-Dive

Funny thing about traveling the world, driving, diving and acquiring: it gets really expensive. And while the rational, nose-to-the grindstone, Loverboy way of countering this has proven itself over the last few thousand years, it’s nowhere near as fun as going down to your local corner store and (as of last Saturday night) walking home with $1.4 billion.

Since 1992, Powerball has been offering the biggest single lottery payout in the US, but just recently (thanks to some big odds changes) the jackpot has soared all the way up to a zeitgeist-ruling $950 million last Saturday and, since nobody won it, $1.4 billion will be up for grabs this Wednesday at 11 p.m. EST. If you were to win, you’d be instantly propelled into the .0001 percent, but like every obnoxious Econ 101 student will tell you, your odds are incredibly small and it’s almost never worth buying in. But as it turns out, this Wednesday’s drawing presents a unique opportunity: you could theoretically buy all 292 million permutations of the six winning numbers at a cost of $584 million and still walk away with an after-tax profit. Well, sort of.

If you’re feeling eager and wanted an ICON Defender so bad that you took the lump sum, you’d actually end up losing money in eight states (depending on state lottery taxes) and your max profit in a state that doesn’t tax would be a mere $67 million, barely even worth it at that point. But since you’re a rational guy, let’s say you’re from tax- (and seatbelt-) free New Hampshire and you take the annuity payment: over 30 years you’ll end up with a total of $1.05 billion in winnings and a profit of $466 million. Not bad for a couple days’ work.

gloria-mackenzie-powerball-gear-patrol
Gloria Mackenzie is the biggest single winner Powerball’s ever seen so far ($370.9 million) and is, by all accounts, an exemplary human being.
AP2013

So why hasn’t anybody done it?

The first and largest of many hurdles is that you physically need to buy 292,201,338 lottery tickets. Assuming that your average bodega can print off one ticket per second, that means you’re going to be standing in that store for 9.3 years. Time to grab some friends to divide and conquer.

If you’re reading this article at noon on Tuesday that means you have 47 hours to buy all the tickets and you’ll need 1,727 people working all the way up until the drawing Wednesday night. On the upside you can tell them that they’ll each make $270,000 for their trouble, but on the downside they’re not going to be your friends for long. For each “employee” to actually buy their lotto tickets you’ll need to give them $338,000 in spending cash. Don’t expect to see them again.

But what if you started buying the hour after the drawing last Saturday (let’s say you just had a feeling that nobody had won)? Surely double the time would make the math work out, right? Nope, you’ve now got 854 employees who can either win $402,000 or steal the $684,000 that you give them.

bill-gates–Gear-Patrol
A billion dollars isn’t what it used to be. Winning the $1.4 billon Powerball won’t even land you on the Forbes 500 — presided over by one Bill Gates (79.2 billion).
AP2013

And so the story goes for even the most extreme time constraint or number of employees since the jackpot became high enough to make this whole thing viable. That is, until you hit the magic number of $1.558 billion. After that it’s possible to turn a profit and (hopefully) not have people run off with your money. Even then, though, it doesn’t take much to throw the whole thing into chaos. Just one employee cutting and running only lowers your odds from 100 percent down to 99.9 percent, but even the smallest chance of being left high and dry will cause nearly all the remaining employees to take the safe money instead. In order to keep your employees, the jackpot would have to be significantly higher than the capital requirements (we’re talking like $3 billion or more).

And that’s just the first problem. Powerball machines can’t work every second of every day without breaking, which means you’ll need more employees at more stores, which means you’ll need a bigger jackpot. Not to mention that raising the initial capital in the first place would be incredibly hard (especially with the risk of employees defecting), and the investors would want a piece, so you’d need an even bigger jackpot for that. And the biggest whammy of all: the larger the jackpot, the more random people who’ll enter and the more likely it is you’ll have to split the jackpot with another winner (or worse, winners) which would completely tank your margins and leave you trying to sell your story to Michael Lewis for $50 and a Big Mac.

All this is to say, maybe it’s best to work for the weekend after all.

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