Talk about a lucky investment. Gregg Skidmore, Brandon Lacoff and Tim Davidson from Belpointe Asset Management in Greenwich, Connecticut claimed the $254 million Powerball Jackpot.Already, the trio formed a new trust, Putnam Avenue Family Trust, after the winning.
Odds of picking the five white balls and red Powerball are one in 195,249,054. The authority picks the five white balls out of a drum of 59, and the red ball out of a drum with 38 others. The order of the picks does not matter, and numbers are not replaced once chosen.
Tickets sell for $1, with no taxes on the purchase. This pick, paid off handsomely, with an internal rate of return of 440,614,904% for the annuity, taking into account taxes, inflation, and just a single ticket buy in. Had they been playing bi-weekly over the past decade, sans win, they’d still turn out with a 400,000%+ rate of return on the annuity.
The net present value of the $254 million annuity is closer to $113.2 million, when adjusting for inflation using current long-term sovereign debt interest rates. That also includes 30 years of taxes; the owners of the ticket would have had to pay the government $80.5 million in taxes.
For gamblers thinking of gaming the system, you’ll have to keep waiting. For the payoff to be a net positive with guaranteed success — meaning the purchase of all possible numbers — the Powerball would have to be 72.5% larger, totaling $435 million.
But even then, you may be out of luck. If someone else wins at the same time, you’ll be firmly in the red.