Wednesday, January 13, 2016

Powerball 'Suckers and Winners,' aka We the People and Government

We the People have paid a total of at least ~$1.5 billion to buy Powerball tickets for a shot at winning the government sponsored lottery.

Let's assume that instead of We the People acting as gullible suckers, aka Powerball players, buying the tickets one at a time, some super rich guy like Warren Buffett or Charles Koch would be foolish enough to buy all the tickets, and that the winning ticket would be included in those purchased tickets. He would win the prize!

But what prize would he have won? Well, as a matter of fact, he would have lost in a really big way. In fact, the more he bought, the more he would have lost. It's a sure thing.

In round numbers, he would have lost ~$1 billion by winning. See Playing Government Powerball which is appropriately subtitled 'For the taxman and state budgeters, hitting the jackpot is a sure thing:'

The 'prize' of $1.5 billion would be ~$900 million in immediate cash value. Then his total income taxes of close to 50% of that cash received would reduce the actual payout to less than $500 million.

$500 million is one third of the ~$1.5 billion needed to purchase all the tickets and hope that the winner is among those purchased. If not, then it's on to the next game and the 'prize' will get bigger. Of course, the real winner will be the government, and real losers will be We the People.

Maybe we should have thousands of lotteries in play. That would help fund the government deficits.

That's my take.

Thanks. Bob.

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