I looked into this briefly too. Two other costs to consider:
1. Sales taxes. Not all states have sales taxes, but most do. Exceptions include: Delaware, Montana, New Hampshire, Oregon. Notably all states have either income taxes or sales taxes, so your best bet is coming from a state (residency) in a state with no income tax and buying your tickets in a state with no sales taxes. [EDIT: This is wrong, see following comments]
2. Normal donations are tax deductible (up to 60% of income). When I was first modeling this (and I think you did the same thing), I was including the tax deductibility of lottery winnings, but not the tax deductibility of the counterfactual use of money (which might be direct donations). Obviously this changes the numbers significantly.
So my best guess is that at current jackpot sizes, it only makes sense to do if you can a) avoid sales tax, b) come from a state with either no income tax or low income tax, and c) already maxxed out your donations deductions (60%).
However, if nobody wins the current jackpot, I can imagine at some point very soon things become more +EV even with significant disadvantages outlined above.
I looked into this briefly too. Two other costs to consider:
1. Sales taxes. Not all states have sales taxes, but most do. Exceptions include: Delaware, Montana, New Hampshire, Oregon. Notably all states have either income taxes or sales taxes, so your best bet is coming from a state (residency) in a state with no income tax and buying your tickets in a state with no sales taxes.[EDIT: This is wrong, see following comments]2. Normal donations are tax deductible (up to 60% of income). When I was first modeling this (and I think you did the same thing), I was including the tax deductibility of lottery winnings, but not the tax deductibility of the counterfactual use of money (which might be direct donations). Obviously this changes the numbers significantly.
So my best guess is that at current jackpot sizes, it only makes sense to do if you can
a) avoid sales tax, b) come from a state with either no income tax or low income tax, and c) already maxxed out your donations deductions (60%).However, if nobody wins the current jackpot, I can imagine at some point very soon things become more +EV even with significant disadvantages outlined above.
Sales tax: Interesting. I live in a state with sales tax but it doesn’t apply to lottery tickets.
Could also make sense for people who don’t itemize so don’t benefit from charitable deduction but would itemize if they won the larger prizes.
Lottery tickets are generally not subject to sales tax, I’m pretty sure.