Analysis of the new 2012 Powerball game changes. Part 1: Game summary & prize evaluation

In late June, the MUSL announced that it was going to change the format of Powerball. Since most available literature simply reiterates the notice of changes, we believe that players are wondering whether: these new changes are good for them, and if they should be eager to purchase tickets at the increased costs.

To help players understand the implications of these changes and whether they should continue to play the new Powerball game, we are writing a 3 part series of posts that:

• Part 1: Evaluate the prize structure in comparison to Mega Millions (this post),
• Part 2: Examine the average Powerball jackpots and anticipated increases (published November 2011), and
• Part 3: Compare the new Powerball return to Mega Millions and other lottery games (to be published).

Originally, we intended to include all of these topics in one post. But, we quickly realized that the length of the post was too long, thus we are breaking the analysis into these 3 parts.

This is Part 1. Its purpose is to explain what the new changes are, and what they will mean to lottery players with regard to prizes that the new Powerball game offers.

The 2012 Powerball Changes

The table below summarizes the array of the Powerball changes. Most notably, players will find that the cost of tickets will increase from $1 to $2 each and that the minimum jackpot will increase to $40 million.

Summary of 2012 Powerball Changes	Power Play Prizes Fixed
Starting jackpot at $40 million (up from $20 million) Match 5 prize fixed at $1 million (up from $200,000) Matching Powerball Only prize at $4 (up from $3) White Ball Remains at 1 to 59 (no change) Powerballs 1 to 35 (down from 39) Regular Ticket Costs $2 (up from $1) Powerplay Ticket Costs $3 (up from $2) Power Play Prize Amounts  Now Fixed (no multiples)	$1M Prize to $2M (2x) $10,000 Prize to $40,000 (4x) $100 Prizes to $200 (2x) $7 Prize to $14 (2x) $4 Prize to $12 (3x)

Because the number of white balls remains the same, the chances of winning the 2nd tier prize of 5+0 remains the same at 1 in 5,153,632.65. However, since the number of Powerballs decreases by 4 to 35, the overall chance of winning the Powerball jackpot will decrease by approximately 20 million to 1 in 175,223,510.

Implementation Date

Implementation of the new game format will coincide with the Powerball's 20th anniversary. The expected sales date for the new Powerball format is January 15, 2012 and the first drawing will be January 18, 2012.

Why the Changes? Powerball's Reasoning.

On its FAQ page, Powerball identified 9 reasons for modifying the game. The first eight provide their rationale why players will continue to purchase tickets at the increased ticket cost. Each of these addresses the players' psychology and takes advantage of their vulnerability. The last reason, "Game variety" is something that must be questioned.

1. Scratch tickets costing $2, $3, $5, $10, $20 and $50 all sell
2. Powerball price was fixed for 20 years
3. Ticket sales increase more rapidly when jackpot is higher
4. Jackpots should increase by $10M each drawing, reaching players "buy" level more quickly
5. Average jackpot of new format will be $255 million (was $141 million)
6. There will be more millionaires since all match 5+0 winners will receive $1M.
7. A fixed Power Play takes uncertainty out of winning. Those matching 5+0 will get $2M, enough to pay taxes and still keep $1M
8. There will be more winners.
9. Game variety.

Game Variety?

With the new Powerball odds reduced to 1 in 175+ million, it is easy to conclude that the overall game format is very similar to Mega Millions which also boasts a 1 in 175+ million chance of winning. The major difference between the games will be: the ticket price; and the prizes for the top two prizes.

The table below summarizes the differences between the two games in a side by side manner. Powerball is shown in the light blue columns, and Mega Millions is shown in the pink columns.

Match	MM 5/56+1/46 Odds	PB 5/59+1/35 Odds	Winners MM	Winners PB	Prize $ MM	Prize $ PB	Prize $ Megaplier	Prize $ Power Play
5+1	175,711,536.00	175,223,510.00	1	1	$12,000,000	$40,000,000	$12,000,000	$40,000,000
5+0	3,904,700.80	5,153,632.65	45	34	$250,000	$1,000,000	$1,000,000	$2,000,000
4+1	689,064.85	648,975.96	255	270	$10,000	$10,000	$34,762	$40,000
4+0	15,312.55	19,087.53	11,475	9,180	$150	$100	$521	$200
3+1	13,781.30	12,244.83	12,750	14,310	$150	$100	$521	$200
3+0	306.25	360.14	573,750	486,540	$7	$7	$24	$14
2+1	843.75	706.43	208,250	248,040	$10	$7	$35	$14
2+0	18.75	20.78
1+1	140.63	110.81	1,249,500	1,581,255	$3	$4	$10	$12
1+0	3.13	3.26
0+1	74.8	55.41	2,349,060	3,162,510	$2	$4	$7	$12
0+0	1.66	1.63

Illustrated are the odds (or chances), number of winners, prize payout for normal tickets, and prize payout for the multiplier (Megaplier and Power Play) tickets of both games.

The six graphs below illustrate various portions of this table, showing the Powerball players percent gain or loss in each of these pairs of information. The percentages are calculated by: dividing the Powerball values by the associated Mega Millions values; subtracting 1; and then multiplying by 100.

---

1. Compare Overall Odds of both Games
Chart P1 shows the differences between the odds of both games. As shown, the chance of winning the Powerball jackpot is only 0.3% less than winning the Mega Million jackpot (so they are about the same). However, odds of matching anywhere from 5 to 1 of the white balls and not the Powerball are much more difficult in Powerball. It is 32% harder to win the 2nd tier prize of 5+0, 24.7% harder to match 4+0, and 17.6% harder to obtain a 3+0 winner in Powerball.

But when a Powerball is matched, it is easier to win a prize. That is because there are less Powerballs than Megaballs. As shown in red, it is 5.8% easier to match a Powerball 4+1, 11.1% to easier for 3+1, and so on. Matching the Powerball only is 25.9% easier in Powerball.

If you are one of the typical 96.9% of players, you will probably not win anything at all. In Powerball, you are 1.8% more likely not to match any balls in Powerball than in Mega Millions. But, on the overall, there will be 0.6% more winners in Powerball.

---

2. Compare Total Winners in both Games
Chart P2 illustrates the differences between the numbers of winners in each category. In effect, it is the mirror image of the above odds comparison. In both games, there is only 1 jackpot winner, and no winners for matching 0, 1, or 2 white balls and not the bonus ball. This means players are indifferent to those categories.

Excluding the jackpot, Powerball offers more opportunities to win a prize whenever the Powerball bonus is matched. In these cases, the Powerball advantage ranges from 5.9% to 34.6%.

When the player does not match the bonus Powerball, Mega Millions outperforms (in red). There will be 24.4% more 2nd tier Mega Millions winners than Powerball. Similarly, those matching 4+0 or 3+0 are 20% and 15.2% more likely to win a prize in Mega Millions than in Powerball.

These differences are all explained by the fact that there are less white balls in Mega Millions and less bonus balls in Powerball.

---

3. Compare PB to MM Prizes per Ticket
Chart P3 summarizes the difference in prize winnings per ticket between the two games.

This verifies Powerball's goal of offering higher jackpot and 2nd tier prizes when the jackpot is set to minimum. Those who win a Powerball jackpot will collect 233.3% more than the Mega Millions winner, and will get 300% more when matching 5 white only.

The Powerball winning ticket also has the advantage for those matching the Powerball and 1 or 0 white balls which will pay out more than its rival game.

Those in the middle are better off with Mega Millions as players matching 4+0, 3+1, or 2+1 balls will receive approximately 1/3 larger prizes.

There is no difference in winnings for players matching 4+1 or 3+0 in either game. And, of course, all losing tickets will collect an even $0.

---

4. Compare PB to MM Prizes by Dollar Spent
Since Powerball tickets will cost $2 each and Mega Millions only $1, it is necessary to normalize the prize winnings to dollar spent.

Chart P4 illustrates this difference. Here we see that Powerball only pays out more for the jackpot and 2nd tier winners.

All other lower tier Powerball prizes pay substantially less than or equal to their associated Mega Millions counterparts.

---

5. Compare PB Ticket to MM Megaplier Ticket
So what happens if a player buys a $2 Megaplier ticket in comparison to the $2 Powerball ticket?

In each case, the player pays $2 either way. But, except for the 1st prize, Powerball players receive lesser prize amounts. Depending on their winning, a player will receive 42.5% to 80.8% less than a Mega Millions winner.

If the player is lucky enough to claim the winning jackpot ticket, the Powerball winner will be paid 233.3% more. Whereas, it you match all 5 white balls and not the bonus ball, you will win the same amount of money in both games.

---

6. Compare PB Powerplay to MM Megaplier
Lastly, a player may wish to buy the multiplier options in both games, which means he will spend $3 for a Powerball Powerplay ticket, and $2 for a Mega Millions Megaplier ticket.

Here we see a pattern similar to that of buying a single Powerball and Mega Millions ticket.

In this case, Chart P6 summarizes the winning payouts. Here, the Powerball player will win more if they win any of the first 3 prizes or the bottom two.

Those whose tickets fall in the middle will receive smaller Powerball prizes compared to Mega Millions.

---

Summary
In summary, we can agree that the Powerball game will pay out higher jackpot prizes. However, we do not believe the extra cost enhances the desirability of the prize.

Players have to remember that approximately 97% of all tickets sold will be losers. This means that only 3% will win something.

Since the chances of winning the jackpot is about the same in both Mega Millions and Powerball, we believe that it is more beneficial for players to buy 2 individual Mega Millions tickets instead of 1 Powerball ticket. By doing this, the Mega Millions player will have twice as many chances of winning a prize compared to the Powerball player. On a per dollar basis, the prize structure for Mega Millions is more attractive as well.

However, if your goal is to win a prize of at least $1 million, then it is better to buy 1 Mega Millions ticket with the Megaplier option. Except for the jackpot, these players lucky enough to have a winning ticket will always win more than the Powerball ticket holder.

---

Sources:
Powerball� Enhancements Start January 2012 (Nebraska Lottery)
Powerball FAQ/History/News (Official Site)
How 2009 Powerball Changes Effect You

Our 5th Year (Wooden) Anniversary (2006-2011)

The month of September marks the 5th year anniversary of our website: Lottery Power Picks.

When we launched our site in 2006, we never imagined the difficulties we would face, nor the amount of time it would require. Like many others, we simply thought that when we launched, it would be an instant success. We aimed our focus at various forums and asked participants to visit us. However, we were quickly dismissed by many who noted that our site didn't even appear in a Google search.

Since then, we have learned to respect the hard work of others and ceased promoting our website within other lottery sites. Instead, we advertised a bit and remained focused on building a comprehensive set of analytical tools to help the general lottery playing population.

Now, five years later, we can boast of a registered membership that exceeds 3,400 players. And, during the past year, we've had over 50 Major Winners: (see our Lottery Power Picks Winners page). The largest prizes that members won were during 2010 to 2011 were:

• $10,000 Mega Millions ( Oct 12 2010 )
• C$5,373.70 Lotto Max ( Jan 14 2011 )
• C$1,187.40 Lotto 649 ( Mar 19 2011 )
• $500 Hot Lotto ( Oct 23 2010 )

Our development efforts during this past year were aimed at learning to utilize and incorporate Google Visualizations into our pages. We believe these tools assist in providing user interaction with both graphic and tabular data. One of the first development projects was to examine the rotation of the earth and moon around the sun:

Earth's Orbit about the Sun using the Google Visualization Motion Chart

While this type of work does not appear not to relate to lotteries, its information has helped us to formulate future analytic solutions for us to address.

This year we have concentrated on adding new functionality and analysis. For example, we have added a new navigation bar at the top of most pages for your use in locating our information. In addition, we have written a variety of full wheel calculators that lets you compare your expenditures versus you potential winnings. Our Pick 3 pages have gained momentum this past year, particularly after we added a number of other states. Of course, we have had to revise our previously released pages whenever a lottery modified their game format (Thunderball, Mega Million, and Euro Millions).

A subset of articles and pages we published this past year are listed below for your reference.

• A Revised Look at the Mega Millions Megaplier Option
• Introducing Our New Navigation Menu
• Lotto 649, UK Lotto, and Irish Lotto Full Wheel Calculators Now Released
• Thunderball, Super Lotto Plus & Texas 2 Step Full Wheel Calculators Now Available
• Two New Pick 3 Games Released (Arizona and Iowa)
• California, Idaho, & Missouri Pick 3 Pages Released

Examples of new functionality we are adding to existing pages can be found in:

• Powerball Power Play Multiplier Breakeven Analysis 
• EuroMillions Lottery Complete Odds and Returns to Players

Unfortunately, these pages are best viewed in Firefox. We are aware that other browsers display differently and are trying to get these to work in all browsers.

We wish to thank all of you who have written to us during the past year and have: informed us of problems, told us of their winnings, and requested new functionality.

And most importantly, we wish to thank all of you for being loyal followers of our site and referencing our information daily. We will continue to improve our content and hope we bring you success in winning the lottery prizes!

Same 5 lottery numbers are drawn on same night in two different lottery games

As we were entering the lottery numbers for Hot Lotto, we realized that the numbers looked familiar. So we reviewed our other results and saw that the UK Thunderball selected the same 5 white balls earlier that evening. The numbers drawn for both Hot Lotto and Thunderball on Saturday, August 20, 2011 were:

Game	White Numbers Drawn	Thunderball Hot Ball
Thunderball	6 7 11 22 33	10
Hot Lotto	6 7 11 22 33	13

The white balls are the same!

The two games are identical in the white ball format because they both require players to select 5 of 39 white balls.

Only the bonus balls portion of the games are different. Thunderball contains 14 Thunderballs, whereas Hot Lotto contains 19 Hot balls.

On the white ball side, there are 575,757 unique combinations in each game. To select the same winning number more than once seems nearly impossible, but drawing it on the same night in two different lottery games across the pond is a miracle.

How Irish Lottery Players Win Money Playing Lotto 5-4-3-2-1

One game that all Irish lottery players should be playing is Lotto 5-4-3-2-1. This is because the numbers utilized are based the Irish Lotto (Lotto Plus 1, and Lotto Plus 2) results and the winning payouts are substantially high.

To play Lotto 5-4-3-2-1, a player chooses five numbers and selects which game results they would like to match. We recommend that the Irish Lotto always be used because of the variety of analytical analysis available. To win a prize, the player must match one of more of the numbers selected in the Lotto drawing.

For this purpose, the player has the option to include or not include the bonus number. We recommend that the bonus number NOT be used because the payouts are higher. The table below illustrates the Lotto 5-4-3-2-1 payouts for both the 6 Number Game (recommended) and the 7 Number Game (not recommended)

Next, using the results displayed in our Irish Lotto Hot Cold Number Analysis page, we currently have identified 5 hot numbers. These are:

02 04 06 12 38

These are the numbers that you should play in the 6 Number Lotto 5-4-3-2-1 Lottery Game. Based on our results analysis, a player using this 5 number combination would have won �1,482 in the last 3 month (26 week) period. Your cash outlay would have been �26, and you would have earned a �1,456 profit. The breakdown of winnings would have been

• Match 1: Seven times (7 * �6 = �42)
• Match 2; Nine times ( 9 * �40 = �360), and
• Match 3: Two times ( 2 * �540 = �1,080).

So, if you live in Ireland and play the Irish Lotto, we highly recommend you play the above numbers in the Lotto 5-4-3-2-1 Game.

Mega Millions Picks All Hot Numbers Again

For the second time in less than 6 months, the Mega Millions lottery has drawn all Hot white ball numbers. In the May 24, 2011 Friday night drawing, the 5 hot white balls: 10 17 19 45 48 were picked. That night, the annuity jackpot was $16 million.


Prior to that drawing, we classified 11 white balls as being hot. If a full wheel of these numbers was played, there would have been 462 unique combinations. If all these were purchased, the cost would have been $462 and the winner would have earned $250,000. However, if the player purchased the Megaplier as well, a cool $1 million would have won for a mere $924 investment.  Unfortunately, the Mega Ball that night was the number 30, which was classified as a neutral number.

The last time all hot balls were drawn in the Mega Millions was Tuesday, December 17, 2010. In that drawing, the annuity prize offered was $133M, but it was not won. You can read our previous article All Hot Numbers Picked in Last Mega Millions Drawing for reference.

Investing or Gambling? Part 10: Conclusion

During the past 9 weeks, we have presented a series of articles questioning whether investing and gambling are synonymous.

• Week 1, we provided an overview of the topic and laid out an outline of the posts to follow.
• Week 2 we defined investing and gambling. We noted the three main distinctions that an investor has verses a gambler: ownership of an asset; value derived from market demands; and option to sell. We also summarized the two similarities: success is based on probabilities; and the future outcomes are unknown.
• In Week 3, we discussed why this topic is important at this time. We pointed out that because of the weak U.S. economy, many people are desperate to earn a living and that temptation to invest and gamble is everywhere.
• Week 4 concentrated on the differences between investing and gambling. Again, we reiterated that investing involves ownership but gambling does not. Also, we indicated that gambling infers fun while investing infers work.
• Week 5's article focused on a few of the successful gamblers and investors or our time. Most of these individuals are currently earning substantial livings concentrating on both of these disciplines. We pointed out that most: were very highly educated and possessed a deep knowledge of mathematics; worked very hard to refine their skills; and dedicated many years of their lives to perfecting their livelihood.
• In Week 6, we presented the various investment products that investors and gamblers have the options buy or play. Investors can be conservative and focus only on CDs or Bonds, or they can get excitement and thrills buying derivatives, commodities, collectibles, or other unique items. Gamblers can also vary their risk by buying lottery tickets, analyzing sporting events, playing board games or casino poker.
• Week 7's discussion focused on the profile of typical investors and gamblers. We noted that  successful gamblers were more: in control of their spending; optimistic about the future; and were more prepared for retirement. Both professionals were highly educated and made analytical decisions. Neither view their profession as gambling.
• In Week 8, we indicated the two mathematical skills that both investors and gamblers possessed were the ability to mentally: construct complex decision trees; and know the probability of success of each outcome by heart.
• Lastly, Week 9 presented the concept of manipulation in the two different industries. Our current belief is that the gambling industry is more regulated and less likely to be manipulated. Whereas, the investment industry is regulated only on a macro level, which leaves the doors to manipulation wide open.

In our opinion, we believe that investing is much more risky than gambling is to the common man. Both professions are comprised of individuals whose sole purpose is to earn a substantial amount of money. Those who gamble usually understand their odds of winning and of losing. They typically wager small amounts of money and participate for the enjoyment or entertainment factor.

However, these same individuals invest comparatively large sums of money in the stock market and 401k accounts. Rarely do they understand the products they are buying or the potential risks of losing money. Far too many people have lost their children's educational funds during the collapse of the dot.com bubble, and are now underwater on their home's real estate investment.

Those who are against legalized gambling will point to the losses of the compulsive gambler, saying how those individuals are sick, irresponsible, and have lost everything.

Yet the losses of our entire population during the recent financial meltdown serve as a lesson in understanding risk. We truly believe that you should never buy anything that you do not understand, and more importantly, never invest with only the hope of attaining a win-fall, because this is when investing becomes simply another word for gambling.

Investing or Gambling? Part 9: Is Manipulation Possible?

Image via Wikipedia

So now that we have: defined the differences between gambling and investing; looked at successful professionals of both disciplines; listed a subset of gambling and investing instruments; and identified the mathematical foundations of both, we are ready to ask ourselves:

Can Gambling & Investing 

Outcomes be Manipulated?

Given the recent events that have driven oil prices through the roof once again, and the exposure of the Madoff Ponzi scheme, we can quickly agree that certain investments may indeed be manipulated.  Additionally, we have all been taught the risks of gambling with regard to: horse races being fixed; people who cheat at poker; three card monte; card sharks; pool hustlers, etc.

Absolutely!

Unless the common investor or gambler understands the outside risks that they face from their competition, they are merely sitting ducks for the professionals who specialize in certain products.

While it is beyond the scope of this article to identify all places where an market prices and game outcomes can be manipulated, we believe it is important to illustrate some of the potential schemes that are aimed at taking your money.

• Buying Commodities. With all the turmoil in the world, the price of gold has increased dramatically. As this metal increased in value, many small Gold retailers have aggressively advertised the reasons why you should buy gold. However, most of these firms are only cashing in on the buying frenzy. They do not care if the price increases or declines. They will make a commission either way. You are the one that will lose.
• Same is true if you buy stocks as an individual investor. For every 100 shares that you buy, someone else may be buying thousands. Most of those who buy in large quantities have much more timely information than you. Unless you can time the market right, there is a good chance that the market will turn against you. All you can do is to go along for the ride.
• Playing casino poker. If you enjoy visiting a casino and playing at a poker table, chances are that you are playing against one or more professionals. These folks play every day and this is their living. They usually have much more money than the common visitor and can therefore influence your playing decisions. You may be lucky to win a few good hands, but in the long run, you will probably lose most of your money to these individuals.
• Horse racing. This is a sports gambling event that you bet against others. Many of those study the past performances and understand the subtleties of individual tracks. However, your main competition is the horse owner, trainer, track workers, and rider community. These are the folks who make a living off their investment. While many of the owners may not make a profit, they will probably not lose money either. This is a small community and they keep everyone in business by taking your hard earned money when you least expect a loss.

As a small investor or gambler, you are always at the mercy of those professionals who specialize in a particular investment type, sporting, or gambling game. Always be aware that they have more money than you which can alter the payout odds or investment prices. Most of the people working against you are in business to earn their own living. As such, they are not targeting you as an individual, but rather you as a member of a class of the uninformed.