Published in Personal finance

August 23, 2023

Published in Personal finance

August 23, 2023

Published in Personal finance

August 23, 2023

# Should I Invest in the Euromillions?

# Should I Invest in the Euromillions?

# Should I Invest in the Euromillions?

The Euromillions lottery, with its massive jackpots and enticing promises of overnight wealth, has captivated the imaginations of millions. However, before rushing to purchase a ticket, it is crucial to take a step back and consider the numbers. In this article, we will explore the question of whether investing in the Euromillions is a wise decision.

## The Odds Stacked Against You

One of the fundamental factors to consider when investing in the Euromillions is the probability of winning. Unfortunately, the odds are overwhelmingly against any individual ticket holder. With millions of tickets sold for each draw and a vast number of potential number combinations, the chances of hitting the jackpot are incredibly slim. In fact, the odds of winning the jackpot in Euromillions are 1 in 139 million.

Calculating the expected value reveals a sobering truth: the potential payout is significantly lower than the cost of a ticket. The median jackpot size in 2023 (at time of writing) amounts to €72 million. The ticket price is €2.50. So, with odds of winning of 1 in 139 million, a ticket price of €2.50 and a potential payout of €72 million (if you are the sole jackpot winner), you are paying €2.50 for an expected value of €0.52. Every time you buy an Euromillions ticket, you are wasting ca. 79% of your money. It is smarter to take a €5 note and light it on fire (don’t do it, it is illegal to destroy money) than to buy €10 worth of Euromillions tickets.

This expected value calculation makes a few assumptions to make the calculation easy to follow. Note that we have assumed that you are the sole jackpot winner, which is not guaranteed. If you are not the sole jackpot winner, the prize money will be shared with the other winners, which would lower the expected value even further. On the other hand, there are other tiers of payoffs besides the jackpot, with somewhat higher probabilities but a much lower payout. Aggregating these probabilities and payouts does not change the overall conclusion that buying Euromillions tickets (or other lottery tickets) is a poor financial decision. The expected payout of a lottery ticket is worth much less than the ticket price. You are better served saving your money.

## Taxes

If the above is not sobering enough, you will likely have to pay taxes on your winnings. The exact tax regime and applicable tax rate differs per country. In e.g. the Netherlands, the tax rate on (domestic) lottery winnings amounts to 29.5%, which would mean you are left with only 70.5% of your winnings.

As calculated above, every time you buy an Euromillions ticket, you are wasting ca. 79% of your money – pre-tax. Taking into account a tax rate of 29.5%, you can expect to lose 85% of your money by playing the lottery.

## Alternative to lottery tickets

You might think that buying ‘just’ €10 per week of lottery tickets does no harm to you financially, because what else could you do with just €10, besides spending it? Even though it is a relatively small amount, it is worth your time to invest it in income producing assets, such as stocks. If you would invest the same €10 in the stock market each week, you could turn a weekly €10 into €233.000 over the course of 40 years – potentially life changing money.

Here are the details of the calculation. The S&P 500 returned 10.06% per year over the last 30 years as per July 2023. If you buy a lottery ticket worth €10 per week, this amounts to €520 per year. Investing €520 per year into the S&P 500 would amount to a small fortune of €233,934.39 over 40 years, assuming a 10.06% yearly return.

## Conclusion

Investing in the Euromillions lottery might seem enticing. Lotteries such as Euromillions advertise a life of instant wealth and luxuries. Who would not want to be a millionaire?

However, it is crucial to consider the sobering reality: the extremely low probability of winning. The expected payoff is substantially lower than the ticket price: the expected payoff is only 21% of the ticket price, pre-tax, based on the weighted probability of winning the jackpot. There are other tiers of payoffs besides the jackpot, but taking these into account does not change the overall conclusion that buying Euromillions tickets (or other lottery tickets) is a poor financial decision. In fact, it is such a poor financial decision that lighting a €5 note on fire (don’t do it – it is illegal to destroy money) has a better expected financial payoff than buying €10 worth of lottery tickets.

You are better served saving your money than to buy Euromillions tickets. Rather, invest the money in income-producing assets. Even investments of small amounts can add up to meaningful capital over the long run. So, think twice before investing your hard-earned money in the Euromillions dream, and explore other avenues that provide a more realistic path towards your financial goals.

The Euromillions lottery, with its massive jackpots and enticing promises of overnight wealth, has captivated the imaginations of millions. However, before rushing to purchase a ticket, it is crucial to take a step back and consider the numbers. In this article, we will explore the question of whether investing in the Euromillions is a wise decision.

## The Odds Stacked Against You

One of the fundamental factors to consider when investing in the Euromillions is the probability of winning. Unfortunately, the odds are overwhelmingly against any individual ticket holder. With millions of tickets sold for each draw and a vast number of potential number combinations, the chances of hitting the jackpot are incredibly slim. In fact, the odds of winning the jackpot in Euromillions are 1 in 139 million.

Calculating the expected value reveals a sobering truth: the potential payout is significantly lower than the cost of a ticket. The median jackpot size in 2023 (at time of writing) amounts to €72 million. The ticket price is €2.50. So, with odds of winning of 1 in 139 million, a ticket price of €2.50 and a potential payout of €72 million (if you are the sole jackpot winner), you are paying €2.50 for an expected value of €0.52. Every time you buy an Euromillions ticket, you are wasting ca. 79% of your money. It is smarter to take a €5 note and light it on fire (don’t do it, it is illegal to destroy money) than to buy €10 worth of Euromillions tickets.

This expected value calculation makes a few assumptions to make the calculation easy to follow. Note that we have assumed that you are the sole jackpot winner, which is not guaranteed. If you are not the sole jackpot winner, the prize money will be shared with the other winners, which would lower the expected value even further. On the other hand, there are other tiers of payoffs besides the jackpot, with somewhat higher probabilities but a much lower payout. Aggregating these probabilities and payouts does not change the overall conclusion that buying Euromillions tickets (or other lottery tickets) is a poor financial decision. The expected payout of a lottery ticket is worth much less than the ticket price. You are better served saving your money.

## Taxes

If the above is not sobering enough, you will likely have to pay taxes on your winnings. The exact tax regime and applicable tax rate differs per country. In e.g. the Netherlands, the tax rate on (domestic) lottery winnings amounts to 29.5%, which would mean you are left with only 70.5% of your winnings.

As calculated above, every time you buy an Euromillions ticket, you are wasting ca. 79% of your money – pre-tax. Taking into account a tax rate of 29.5%, you can expect to lose 85% of your money by playing the lottery.

## Alternative to lottery tickets

You might think that buying ‘just’ €10 per week of lottery tickets does no harm to you financially, because what else could you do with just €10, besides spending it? Even though it is a relatively small amount, it is worth your time to invest it in income producing assets, such as stocks. If you would invest the same €10 in the stock market each week, you could turn a weekly €10 into €233.000 over the course of 40 years – potentially life changing money.

Here are the details of the calculation. The S&P 500 returned 10.06% per year over the last 30 years as per July 2023. If you buy a lottery ticket worth €10 per week, this amounts to €520 per year. Investing €520 per year into the S&P 500 would amount to a small fortune of €233,934.39 over 40 years, assuming a 10.06% yearly return.

## Conclusion

Investing in the Euromillions lottery might seem enticing. Lotteries such as Euromillions advertise a life of instant wealth and luxuries. Who would not want to be a millionaire?

However, it is crucial to consider the sobering reality: the extremely low probability of winning. The expected payoff is substantially lower than the ticket price: the expected payoff is only 21% of the ticket price, pre-tax, based on the weighted probability of winning the jackpot. There are other tiers of payoffs besides the jackpot, but taking these into account does not change the overall conclusion that buying Euromillions tickets (or other lottery tickets) is a poor financial decision. In fact, it is such a poor financial decision that lighting a €5 note on fire (don’t do it – it is illegal to destroy money) has a better expected financial payoff than buying €10 worth of lottery tickets.

You are better served saving your money than to buy Euromillions tickets. Rather, invest the money in income-producing assets. Even investments of small amounts can add up to meaningful capital over the long run. So, think twice before investing your hard-earned money in the Euromillions dream, and explore other avenues that provide a more realistic path towards your financial goals.

The Euromillions lottery, with its massive jackpots and enticing promises of overnight wealth, has captivated the imaginations of millions. However, before rushing to purchase a ticket, it is crucial to take a step back and consider the numbers. In this article, we will explore the question of whether investing in the Euromillions is a wise decision.

## The Odds Stacked Against You

One of the fundamental factors to consider when investing in the Euromillions is the probability of winning. Unfortunately, the odds are overwhelmingly against any individual ticket holder. With millions of tickets sold for each draw and a vast number of potential number combinations, the chances of hitting the jackpot are incredibly slim. In fact, the odds of winning the jackpot in Euromillions are 1 in 139 million.

Calculating the expected value reveals a sobering truth: the potential payout is significantly lower than the cost of a ticket. The median jackpot size in 2023 (at time of writing) amounts to €72 million. The ticket price is €2.50. So, with odds of winning of 1 in 139 million, a ticket price of €2.50 and a potential payout of €72 million (if you are the sole jackpot winner), you are paying €2.50 for an expected value of €0.52. Every time you buy an Euromillions ticket, you are wasting ca. 79% of your money. It is smarter to take a €5 note and light it on fire (don’t do it, it is illegal to destroy money) than to buy €10 worth of Euromillions tickets.

This expected value calculation makes a few assumptions to make the calculation easy to follow. Note that we have assumed that you are the sole jackpot winner, which is not guaranteed. If you are not the sole jackpot winner, the prize money will be shared with the other winners, which would lower the expected value even further. On the other hand, there are other tiers of payoffs besides the jackpot, with somewhat higher probabilities but a much lower payout. Aggregating these probabilities and payouts does not change the overall conclusion that buying Euromillions tickets (or other lottery tickets) is a poor financial decision. The expected payout of a lottery ticket is worth much less than the ticket price. You are better served saving your money.

## Taxes

If the above is not sobering enough, you will likely have to pay taxes on your winnings. The exact tax regime and applicable tax rate differs per country. In e.g. the Netherlands, the tax rate on (domestic) lottery winnings amounts to 29.5%, which would mean you are left with only 70.5% of your winnings.

As calculated above, every time you buy an Euromillions ticket, you are wasting ca. 79% of your money – pre-tax. Taking into account a tax rate of 29.5%, you can expect to lose 85% of your money by playing the lottery.

## Alternative to lottery tickets

You might think that buying ‘just’ €10 per week of lottery tickets does no harm to you financially, because what else could you do with just €10, besides spending it? Even though it is a relatively small amount, it is worth your time to invest it in income producing assets, such as stocks. If you would invest the same €10 in the stock market each week, you could turn a weekly €10 into €233.000 over the course of 40 years – potentially life changing money.

Here are the details of the calculation. The S&P 500 returned 10.06% per year over the last 30 years as per July 2023. If you buy a lottery ticket worth €10 per week, this amounts to €520 per year. Investing €520 per year into the S&P 500 would amount to a small fortune of €233,934.39 over 40 years, assuming a 10.06% yearly return.

## Conclusion

Investing in the Euromillions lottery might seem enticing. Lotteries such as Euromillions advertise a life of instant wealth and luxuries. Who would not want to be a millionaire?

However, it is crucial to consider the sobering reality: the extremely low probability of winning. The expected payoff is substantially lower than the ticket price: the expected payoff is only 21% of the ticket price, pre-tax, based on the weighted probability of winning the jackpot. There are other tiers of payoffs besides the jackpot, but taking these into account does not change the overall conclusion that buying Euromillions tickets (or other lottery tickets) is a poor financial decision. In fact, it is such a poor financial decision that lighting a €5 note on fire (don’t do it – it is illegal to destroy money) has a better expected financial payoff than buying €10 worth of lottery tickets.

You are better served saving your money than to buy Euromillions tickets. Rather, invest the money in income-producing assets. Even investments of small amounts can add up to meaningful capital over the long run. So, think twice before investing your hard-earned money in the Euromillions dream, and explore other avenues that provide a more realistic path towards your financial goals.