Is powerball beatable? (nt)

In theory, you could buy up every ticket combination and be assured of a profit when a rollover makes the jackpot exceed the cost of buying all the tickets. The problem is, you could still end up splitting the jackpot and losing money, so you would have to focus exclusively on very unpopular number combinations to keep the operation positive EV, which means you will not be able to cover all the numbers and risk losing millions. An Australian lottery syndicate actually did this and made money.

With Powerball, I think many people buy random number combinations which would probably make it impossible to get an edge, as even unpopular combinations may be selected when they would not be if people had to choose the numbers. In addition, there may be some prohibition on bulk-buying (lottery companies don't like syndicates since this reduces the value of the jackpot for ordinary folk). Even then you have the massive difficulty involved in processing all those tickets. And then you have factors like taxation and so on.

You could just buy a few tickets and have a small positive EV. But the variance is so massive that makes no real sense on any level. It might just be possible to get a valid edge on lotteries where the rollover cash trickles down to the lower prize tiers-even that is rather unlikely, and I don't think any US state lottery has an appropriately equitable distribution of payouts.

Well actually, no. But there is more to it than that. Lotteries are inefficient markets. That is technical economist-speak for you can select numbers which are less likely to make you split a shared prize. And that greatly affects the EV of your ticket. For the best analysis of this phenomonon read "The Winner's Curse" by some Univeristy of Chicago economist. There is a detailed analsis and a list of the best numbers to play. Generally, the numbers ending in 8 and 9 are better to play. I keep a spreadsheet that calculates the EV on all of these big prize pools and haven't found an EV greater than $.75 to $.80 yet, but someday I hope to.

"The Winner's Curse" is a great read for anyone interested in new ideas for advantage play.

After posting and reviewing my data, I found a historic EV in my data of just shy of $0.92. That surprised me because I didn't remember it.

The author of "The Winner's Curse" is, Richard H. Thaler a great author who will one day win the Noble for Economics. You want a positive EV, bet on that.