This is an inexpensive way to build rapport with people in the office...I'd participate simply in the interest of being a team player.

Lotteries are a fools game. Once every few years the odds get close to even on some of the big multi-state drawings after a bunch of misses, but 99% of the time it's not even close.

Some of my co-workers and I have a lottery pool that we do only when the jackpot goes over $100 million. It really is harmless fun. If I lose, I'm out $5 and it goes to the schools anyway (I'm probably opening up a can of worms with that one...)

Any recommendations as to whether the pool chooses Cash or Annuity? If you're young and fairly healthy, should you make the pool enter into a "tontine" like agreement?

@snowmoon: I've said it before... I believe my odds of winning the lottery are the same whether I play it or not.

I opted not to participate in my last office pool and my boss joked around with me crunching the numbers. We were a number crunching group, so figuring out the annual investment seemed logical to me. It would have cost $104 per year to chip in, I worked there for two years so I would have paid $208. They won once where it worked out to $175 per person, I would have lost.

We don't have an office pool. Either that, or we do, but everyone hates me and keeps it as a very well guarded secret. I guess I could show them! and purchase my own lotto tickets, but then that would be like cutting off my nose to spite my face.

I've always joined office lottery pools. The again, I've also been struck by lightning and "died" once, too, so I don't think the odds are that terrible for me.

@redskull: at least if you DON'T play, you're saving the dollar or two you'd pay to buy the tickets!

Everyone always rags on the lotto, but for a dollar, you get something to talk about and something to hope for. And if you wanted to apply economic theory to it, isn't the utility from a $1 lotto (slight thrill and a chance at millions) greater than $15 for a movie? Depends on the person, and for me its worth it. Like any vice / entertainment / distraction you just have to keep it moderate and in check with your greater goals.

@pb5000: But how much more likely were they to win had they had 5 more draws in each weeks pool? That would have probably made it break even.

@White Speed Receiver: I once wanted to hike the AT. My Mother said "What if you run across a ax wielding crazy person?" I said "Mom, what are the chances two axe wielding crazy people will cross paths on the AT?"

Everytime my coworker says he is going down to Primm (CA/NV border) or AZ for Lotto tickets I try to remind him (all in good fun) that it is a tax on the poor or stupid.

I know he isn't poor, so where does that leave him...

@redskull: No, but you can beat the odds to break even. There's 140 million combinations on PowerBall, so the odds of hitting the big jackpot are 1 in 140 million. That means if you buy 140 million tickets, it costs you $140 million, and in there you're guaranteed a winning combination. If the jackpot is over $140 million, you will make money. You just beat the odds.

I acknowledge this does not account for taxes or other rules of the game. I'm only simplifying to illustrate the point.

So I see Pascal's Wager for poor people, except without the infinite payoff and infinite sorrow. It becomes even worse.

@Hatin'SharkWeek_GitEmSteveDave: SteveDave, how can you hate shark week???

@snowmoon: No, they don't. The odds of winning any individual drawing with X number of tickets is always the same. When the prize becomes very large, the (potential winnings)*(chance of winning)-(cost of ticket) may indicate that buying a ticket is a positive net present value investment, but that doesn't affect the odds of winning.

What about those stories always on the news, about office lotto pools? They guy who buys the tickets wins, doesn't tell anyone, runs off to cash it, and then refuses to share the loot with the rest of the pool? Former long time friends fight bitterly, and there are years of lawsuits.

The guy with the winning ticket will claim he should get it all because he bought an "extra" ticket for himself and that was the winner, or that he deserves 75% because he drove to the store, or he gets it all because they gipped him the week before. There are hundreds of reasons it could go wrong.

I'd rather buy a lotto ticket by myself, if I was going to buy one, rather than risk a years long bitter public battle. I realize there are cases where everyone shares nicely and fair, but I worry those are not the norm.

If I ever won myself, I'd hope to claim it anonymously, to prevent the torment some people have gone through when relatives and old friends come out of the woodwork and suddenly claim you owe them money.

I knew a woman who won $50K in a scratch off. Word got around and relatives and friends came DEMANDING a portion of her winnings. "Let's go on vacation together, you can afford a trip to Bermuda!" "I need new tires on my car, you can afford it!" "I have a business venture and just need $20K" "Pay for my boob job! I need some self-esteem after my divorce."

She locked herself away for a few days, and finally took the money and bought her parents a really nice car and prepaid the insurance on it. Their old car was breaking down and she knew the new one would last for years. But most of all, they never asked her for a dime. They just said "We're so happy for you honey" when she won the money.

She told me they were always so wonderful to her, even when they didn't have much to give financially. She wanted to do something in return, as well as get all these other people off her back. Funny, the other "friends" and relatives stopped calling once they heard the money was spent. Figures. But I think it is sweet what she did for her parents.

I play Mega Millions every week, only $1... "our" numbers, if you will.

My wife asked me to justify it one time, and I eventually explained it that it's an insurance policy. We pay a couple thousand dollars a year to Auto-Owner's Insurance for our house and car insurance against the small possibility of something BAD happening. Having our lottery tickets is $104/year "insurance" against the small possibility of something GOOD happening.

@winstonthorne: 2 bucks to build rapport - or, for FREE you can be the office douche that goes on and on about how the odds of winning are firmly stacked against you.

It's the easiest money you'll ever spend on office politics in your life.

@formatc: Oooooh so THAT's what I need to be doing with my 140 million! Ahaha. Good point, though.

@Hatin'SharkWeek_GitEmSteveDave: Unless interest rates are at historical highs, you should always take the cash payout. Even then there is an argument for the cash payout since you could theoretically do about as well investing as the lottery commission can, and could pay yourself a significant annual sum while still retaining the principle amount in your investment(s).

@Hatin'SharkWeek_GitEmSteveDave: If entering a pool, I'd only do so if everyone agreed to one method in writing and everyone signed the agreement together, all as witnesses. It would state equal splits, method of payment, etc. All the details would be covered. Shame people have to do so, but to avoid infighting later on if they did win. One jerk could run off with the ticket and claim "I never agreed to split it." Seen it on the news several times over the years.

@Hatin'SharkWeek_GitEmSteveDave: At lotto-level odds, another 5 tickets wouldn't likely have made a statistically significant difference.

@trekwars2000: For people who can afford the $1, buying a lotto ticket is no more stupid than buying a $1 bottle of water when there is a water fountain or water tap handy.

@katstermonster: Because I live on the Jersey Shore, where the events that the movie Jaws were based on, happened. That, and I am learning to Kite Surf this weekend, and Discovery, a channel I watch a lot of, keeps playing commercials for shark week, like this:

@formatc: A couple additional thoughts:

* jackpots can be split.

* there are lower prizes that you also can win -- it isn't just about the jackpot if you want to look at the point you break even.

I've always wondered why people can be taxed on winnings but cannot write off losses. Or can they?

@Hatin'SharkWeek_GitEmSteveDave: ANd that's why I always bring a bomb to the airport!

@Hatin'SharkWeek_GitEmSteveDave: Well, they sort of happened. It's still kind of humorous, having grown up in Matawan, knowing a great white went up that trickle of a creek.

Not a fan of shark week because they sensationalize shark attacks, which are fairly rare compared to the number of people hanging out at various beaches.

@statgrad: i think you can write them off only against any gambling winnings you declare. so if you hit it big at the track or casino (I think it has to be over $10k) and they make you fill out a w-9 and declare it, then i think you can write off your lottery tickets and other gambling losses.

@Hatin'SharkWeek_GitEmSteveDave:
I thought that it happened on the Vineyard. Or mebbe that's just where it was filmed. (partially filmed?)

@chiieddy: Yeah, all I see is two guys on a dock, saying "I don't want you to cut that shark open, and see that GitEmSteveDave guy spill all over the dock".

@Julia789: The problem with lots of winning lottos is how sloppily they're run. They don't consider the ramifications of lazy "administration" until it shoots them all in the foot. For a proper office pool, there should be some sort of contract, and everyone should give their money to one trusted participant who purchases all of the tickets, then makes a photocopy of them for all members. It's not a great deal more trouble, but it's good insurance against the disaster that would happen in the event of a win.

@Hatin'SharkWeek_GitEmSteveDave: If you are in a pool, take the cash - while there's the huge hit up front for the cash option and the taxes, it's better than ensuring the annuity is evenly split among the 10 people in your group. Cash is king in a situation like this.

@formatc: But you fail miserably at illustrating your point. Yes, with 140 million tickets you're guaranteed a winning combination, not the winning combination. If one or more gamblers also have that winning combination, the pot is split and you lose tens of millions of dollars. If it were a sure bet anytime the pot was greater than $140MM, don't you think hedge funds or venture capitol firms would be chomping at the bit to guarantee a multi-million dollar windfall in a single day?

I agree if you buy 140 million tickets you've beaten the odds to "win" the lottery because you will have a single winning ticket. However, you haven't necessariliy beaten the odds to turn a profit using the lottery.

@GearheadGeek: First let me say that I don't disagree with your conclusion - cash payout.

But as to why - lottery commissions don't invest anything. They simply buy annuities with the intake from companies that offer them.

Which makes the debate of how well you'll do lump sum vs. yearly payout a matter of opinion about annuities. Annuities generally guarantee a certain level of income for the rest of your life, in return for a lump sum payment up front (that lump sum payment is made by the lottery commission, if you win and choose the yearly payments.) It's like an insurance policy, but instead of insuring you against death, the policy is betting that you will die, hopefully soon.

And in fact, out of the pool of all the people who buy annuities, many will die - perfectly healthy people who get run over by a bus or otherwise expire unexpectedly.

The annuity figures in for this effect with some level of accuracy, and in fact your returns from an annuity are generally better than the underlying investments because of the "early death factor" (or whatever you want to call it.)

That said, if you're married the yearly payouts are generally not as good because they usually die with you, leaving your spouse with nothing... whereas you can take the lump sum, buy your own annuity that includes a survivor clause for your spouse, and both of you will be set for life.

Of course if you're unhealthy and don't expect to change, take the lump sum and invest it yourself. An annuity is a bet against your life expectancy, and you already know what the odds are.

So basically it all boils down to "It Depends"

I've read that with the odds of winning what they are, buying extra tickets doesn't really improve your chances of winning. So 1 ticket is just as good as 5-10 tickets as far as your odds go.

@crackblind: I always book flights with nuns and orphans on board. And possibly a girl on her way to the Mayo clinic for a new heart. And of course, someone who speaks jive.

@formatc: You fail to account for the possibility of someone else hitting the jackpot with you. Even with a jackpot of 200 million your expected gain is negative unless you can somehow keep other people from purchasing tickets.

Yes, even without taxes.

@statgrad: You can deduct up to $400 in gambling losses if you itemize, IIRC.

@imsupermattt: This is my attitude towards it, too. People seem to assume everyone who dares buy a lottery ticket is math-illiterate. Most don't factor in entertainment value. Considering I know people who won't bat an eye at plunking down several hundred dollars to spend a night in AC sitting in front of a slot machine, $52/yr for a weekly lotto ticket doesn't strike me as a terrible price for some amusement.

@temporaryerror: Well....I guess .0001% chance of winning is approximately equal to .0003% chance of winning. That IS one way to look at it.

@billsquared: I like that idea... especially considering what it costs for all the other insurances, ~$100 year isn't bad at all.

@squinko - applauds the death of FBC: Place I used to work did that except it was 50 million and the cost of entry was only $1. With 40-80 people in the pool, it's simply not justifiable to enter the lotto at any value lower.

@Hatin'SharkWeek_GitEmSteveDave: leg 'er down a smack 'em yak 'em!

Any spending I do on lottery tickets, scratch cards, keno, etc. comes out of my budget under 'Entertainment' - not coincidently the same place my bar tab falls.

If you don't care about the lotto, but scenario 4 worries you, you can at least participate with the lowest buy in possible.

Round up the rest of the people in the office that don't play and split a single entry. Sure, rather than winning 1 million you'll only win $50,000, but your ticket only cost $0.05. And that $50,000 is still enough to make you happy, IMHO.

I don't participate in the office pools, I am too greedy. If they win I will be happy for them and not feel put out because I choose not to participate.

But the, because I -am- greedy, when the payout gets really big I sometimes buy two tickets with the same numbers so I can have two shares of a big payout if by some miracle I win and the nightmare of someone else getting numbers too.

I am not worried about the $1-10 a month I put into tickets, I have budgeted recreational cash for myself, and if I choose to spend it on lotto tickets instead of an extra book or something, it still comes out about the same for me.

@Julia789: Never a problem for me. The guy who bought the lottery tickets for the group made photocopies of the tickets for everyone BEFORE the drawing.

That's the only way to go.